Q4 2024 S&W Seed Co Earnings Call
Good day, and welcome to that isn't WC fourth quarter 'twenty 'twenty four earnings conference call.
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Speaker Change: I would now like to turn the conference over to Robert Blum with some partners. Please go ahead alright. Thank you very much and thank you all for joining us today to discuss S. W seed companies fourth quarter and fiscal year 2020 for financial results for the period ended June 30th 2024 with us on the call.
Robert Blum: Presenting the company today are Mark Herman Company's Chief Executive Officer, and Vanessa Bowman, the company's Chief Financial Officer at the conclusion of today's prepared remarks, we'll 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.
Robert Blum: Want to ask the question. If you are listening through the webcast portal and we'd like to ask a question you can submit your questions through the ask a question feature in the webcast player and we will do our best to get to as many questions as possible before.
Speaker Change: Before we begin with 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.
Speaker Change: 1934, as amended and such forward looking statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act up 1995.
Speaker Change: 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 projected.
Speaker Change: 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 rest of 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.
Speaker Change: For the fiscal year ended June 30th 2023, and other filings subsequently made by the company with the Securities Exchange Commission. In addition to supplement Us W. Financial results reported in accordance with U S. Generally accepted accounting principles or GAAP S and W will be discussing adjusted EBITA on this call.
Speaker Change: These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measure and are not prepared under any comprehensive set of accounting rules or principles a description of adjusted EBITDA and reconciliations of historical adjusted EBITDA to net loss are included at the end about them.
Speaker Change: These earnings release issued earlier today, which has been posted on the Investor Relations page of S. W's websites in.
Speaker Change: An audio recording and webcast replay for today's conference call will also be made up the online on the company's Investor Relations page.
Speaker Change: With that said, let me turn the call over to Mark Harmon, Chief Executive Officer, Preston WCS Company Mark.
Mark Harmon: Thank you Robert and good morning to all of you I am excited to be speaking with you all today to set the agenda for this mornings call I will provide a high level overview of the progress that we've made during the past year, including the commercialization of double team, where I will also provide an update of our commercialization plans.
For the upcoming year as well as a review of the server market as a whole I will then touch on the progress being made in our E V O O joint venture and some of the activities taking place there and we will of course discuss the voluntary administration process taking place in Australia.
Mark Harmon: I assume most of you saw the process is expected to conclude in the fourth quarter of calendar 2020 core Vanessa will then run us through the historical financial results, including the enhanced segment reporting which was a component component of the delay in the 10-K filing process. We will then.
Mark Harmon: Look to take any questions that you might have at the end of the call.
Mark Harmon: First let's take a look back at this past year, where I think it's important to note. The general strength of our Americas business double team revenue came in at $10 9 million, an increase of 68% compared to previous year.
Mark Harmon: Erika sorghum related revenue, which includes double team as well as our conventional highbridge came in at $24 million. This was up 10% compared to the previous year on the Americas forage operations. We came in at $9 9 million, which was above the $90 million expectation we provided.
Mark Harmon: At the beginning of the year.
Mark Harmon: Companywide gross margins of 26, 2% were above our stated outlook of 24% to 26%.
Mark Harmon: We maintained a keen focus on operational effectiveness.
Mark Harmon: Operating expenses, excluding any impairments came in at $30 million. This was well below our stated guidance of $32 5 million on.
Mark Harmon: On the flip side, our international operations continue to experience challenges, which we have been discussing with all of you during the previous calls and led to our Australian subsidiary going into voluntary administration with Deloitte and touche assigned as the administrators of the entity as of July 24th 2024.
Mark Harmon: Again, I will touch more on this in a moment overall, Australia domestic and international sales were just $29 1 million last year, well off expectations. We had at the beginning of the year of 20 or $45 million to $50 million and overall was down 33% compared to last.
Mark Harmon: Year, despite the impact this impact the improvement in the Americas, coupled with operational efficiencies where possible led to overall adjusted EBITDA improvement from previous year, given the headwinds from the international I believe this is quite an accomplishment.
Mark Harmon: Let's discuss the Americas in more detail.
Mark Harmon: As I mentioned during this past year double team experienced a rapid growth in the marketplace with revenue up 68% compared to last year, we estimate that the proprietary high value sorghum trade technology will be planted on approximately 10% of all sorghum acres in the United States in 2024.
Mark Harmon: Up from approximately 6% share in 2023.
Mark Harmon: While the $10 9 million revenue was just below the low end of our outlook. We provided of 11 5 million. We believe this delta is almost entirely due to the change in sorghum acres planted in the U S.
Mark Harmon: Year compared to previous years.
Mark Harmon: And not reflective of the acceptance of the trade or the performance of our sales team for those of you that follow the industry closely you're well aware that the USDA came out with their sorghum acre report at September 12, which indicate indicated total sorghum acres planted in 2024 was $6 3 million.
Mark Harmon: In acres. This is down 12, 5% from $7 2 million acres planted in 2023.
Mark Harmon: This data makes it clear that we in fact met our market share objectives of being on more than 10% of total acres in 2024.
Mark Harmon: The pullback in acres. However, did have an impact on total acre adoption and thus our revenue in 2024.
While their disappointment in the acre numbers, our enthusiasm and more importantly, the enthusiasm growers towards double T remains extremely high with expectations to be on 13% to 15% of grain sorghum acres next year. That's the farm value that double team creates is highly evident through the.
Resulting increase in yield through controlling grasses, which rob the sorghum crop nutrients water sunlight and ultimately reducing sugar yield. They said this rapid adoption of our high value high margin solution in just three years since its initial introduction remember double team.
Mark Harmon: <unk> gross margins of greater than 60% has led to a strong improvement in the company wide gross margins yes.
Mark Harmon: Total revenue in the future continues to shift more towards a robust sorghum technology portfolio, including product line expansions extensions and new technology offerings planned over the next year, we expect to see continued top line and margin expansion in support of our near term goal of profit.
Mark Harmon: Ability.
Mark Harmon: As we look to next year, we continue to build on our robust commercial infrastructure to drive continued market share adoption going forward.
Mark Harmon: S. N W is being recognized as the leader in sorghum technology, providing farmer farmers production tools that increase the value of shore of them acres.
Mark Harmon: We are working with over 15 independency companies in the U S market, which have signed on to and in license of our sorghum trades, providing their growers customers the benefits of S. N W. Sorghum trades in their seed brands. Each of these independents see companies have strong relationships with their <unk>.
Mark Harmon: Farmer customers as part of our strategy to further accelerate growth. We have launched a pilot program with many of our licensees, which enables them to purchase finished units, including production and then through a grower point of sales or a G. P. O S reporting P. S N W. A royalty on units sold.
Mark Harmon: We believe this model will contribute to continued market penetration growth.
Mark Harmon: With the importance of all seed sorghum seed brands to our trait penetration success.
Mark Harmon: We have also adjusted our sales and marketing efforts to ensure S. N W. Supporting all seed brands, representing our technology in the market, including changing the job title of our sales reps to S. N. W technology ramps their training and focus is I'm assisting all seed brands carrying S. N W. Sorghum creates.
Mark Harmon: Success, which also supports the expanding S N W trade market penetration.
Mark Harmon: That's M. W. Technology reps are also focused on the largest serve them growers in the U S is they are both thought leaders and trained leaders in the market. Our reps goal is to build a positive professional relationship supporting these large farmers success with us in W. Sorghum trades, while working with seed brand in retail.
Mark Harmon: Taylor or dealer of the growers choice.
Mark Harmon: We're also making great progress with global partners with our chemistry partner Adama, completing the chemistry trials and registrations in key global Sorbo markets as well as licensing agreements with global sorghum independent seed brands that are current market leaders, which will accelerate market success.
Mark Harmon: And enabled timely sorghum trait launches in all targeted sorghum.
Mark Harmon: Our global circuit markets. These agreements enable S. N W serve them creates the optimize global market penetration, while maintaining very efficient opex and capex.
Mark Harmon: On the production side, we continue to make significant progress with our efforts to streamline operations and work towards best in class cost of goods with each element of production focused on ensuring quality and efficiency.
Mark Harmon: Made great progress in the last year, we're streamlining our inventories at the end of 'twenty four 'twenty five S. N W. Americas carry out inventory will be reduced over 30% year over year.
Mark Harmon: This will enable us to pivot our summer 2025 production to the newest highest yielding sorghum products aggressively moving our lineup to the newest high yielding D T to hybrids as well as further drive improvement in our cash management through reduction of cash tied up in inventory.
Mark Harmon: Also increasing utilization.
Mark Harmon: Ports reductions in obsolescence for 2025 and beyond our metric is to optimize the balance of total inventory, allowing aggressive sales growth, while enabling the launch and production of the freshest lineup of high value products.
Mark Harmon: As we have stated in the past our research commitment and investments are focused on creating sorghum intellectual property to increase the productivity and farm financial return.
Mark Harmon: Including conserving water and inputs producing a crop with enhanced nutrients and supporting food security that is uniquely equipped and adapted for tougher growing conditions, while double team penetration continues to grow we are in the process of launching the second generation.
Double team trained B T, two which will enable a wider application window as well as expanded crop resistance to the accompanying first stacked herbicide with a new and broadening class up high yield hybrids, providing an expanded market fit.
Mark Harmon: Beyond double team, which gives sorghum growers and over the top non GMO.
Mark Harmon: Grassy weed control option, we are expanding our focus on silicon through the launch of our precious asset pre trade this year.
Mark Harmon: Impressive free sorghum is designed to remove naturally toxic metabolites.
Mark Harmon: From stress, Oregon for safe worry feet grazing and Hey, one quick point on that note is that our pilot launch of press sick free forage sorghum in 2024.
Mark Harmon: Expanded exposure and experience leading up to this year's full launch will further broaden the lineup.
Mark Harmon: To put some perspective to it the farm value of Precip free technology allows farmers to safely grades room in animals cattle sheep were.
Mark Harmon: Removing the concern of livestock feeding safety due to risks with pressing acid due to drought conditions are creating snaps into fall with our focus on bringing value to serve them producing acres. We plan on introducing our first factory in 2028, a companion a double team in Prestwick free.
Mark Harmon: Into a single seat option, which adds value for farmers.
<unk> trade D T. Two P S.
Mark Harmon: Grain sorghum creates an additional farm value up 30 to 60, plus dollars per acre, adding pressure free to D. T grain sorghum will create an effective system of harvesting your grain sorghum.
Mark Harmon: Mediately being able to put livestock on those acres could raise on our high quality forage for 30 to 60 days in many farm areas. The sorghum can continue to re growth.
Mark Harmon: To the extent that feed value the acre until the hard freeze.
Mark Harmon: Whether the farmer is raising their own livestock or oppressive free creates an effective new acre grazing lease opportunity to neighboring farmers paretic fee pre will create a new farm value core grain sorghum acres.
Speaker Change: Together, we believe the added value is a tremendous is tremendous opportunity for sorghum partners high value trade technology solutions will be a key driver to <unk> long term success as we are becoming the key technology provider and so.
Speaker Change: Transitioning briefly to our joint venture with shell focused on developing biofuels through our vision bio energy partnership an entity in which we currently retain a 34% interest.
Speaker Change: Minority interest as most of you know this partnership intends to develop camelina and other oil seed species.
Speaker Change: Which oil and meal can be extracted for future processing into animal feed biofuels and other bio products with a limited supply of arable land Camelina provides a long term opportunity to maximize farmland for food production.
Speaker Change: On February 14th 24, if you recall, our mission bio energy announced it had been granted a global license to certain proprietary varieties of Campbell from yield 10.
Speaker Change: A leader in the development of Campbell, Nina yield 10 is supplying vision bio energy certain camelina varieties, including varieties exhibiting herbicide tolerances spray applications of the broad spectrum herbicide compassionate.
Speaker Change: Which we believe will enable vision bio energy to accelerate its planned commercial activities, especially given that herbicide tolerance is critical to enable a ramp up to the commercial production of Camelina.
Speaker Change: In calendar year, 2020 core vision bioenergy plants to sample this herbicide tolerant system.
Speaker Change: Through the summer and fall with some of its key camelina growers, while simultaneously building planting.
Speaker Change: Seed supply to support a potential commercial launch in the calendar year 2025.
Speaker Change: While the Americas operations continued to improve and meet expectations, we have experienced challenges to our Australian domestic and international operations, which have been communicated over the past few quarters.
Speaker Change: As a reminder, in early 2023, we communicated that we were working on the possibility of a strategic transition involving our Australia International operations headquartered in Australia.
Speaker Change: Upon further evaluation to the changes within our Australia International commercial footprint.
Speaker Change: We announced that one of our subsidiaries S. N W. Australia P. T Y had entered into voluntary administration or be a under applicable Australian law effective July 24th 2020 core.
Speaker Change: This decision was made after careful consideration of S. N W. Australia's financial position and ongoing challenges in the current market environment.
Speaker Change: Challenges include the lack of viable strategic alternatives to Saudi Arabia as recent discontinuation of.
Speaker Change: Import permits for alfalfa seed and all forges and the increased risks that S. N W. Australia would be unable to meet its debt obligations.
Speaker Change: V. A is a process designed to assess a company's financial situation and operations and explore options to provide a better return for creditors. The VA processes expected to conclude in November 2024, and we continue to work collaboratively in good faith with the administrators in Australia.
Speaker Change: Yeah.
Speaker Change: We will look to share more with you as it becomes available.
Speaker Change: With that said, let me turn it over to Vanessa for a detailed review of the financials. I will then provide some brief closing comments and turn it over for any questions Vanessa.
Vanessa Bowman: Thank you Mark good morning to everyone on the call today.
Vanessa Bowman: Before we walk through the financials I thought it appropriate to provide a bit of background on the delay in the filing of our fiscal year 2024.
Vanessa Bowman: As previously announced we are currently going through the V. A process in Australia, which is expected to conclude here shortly.
Vanessa Bowman: This process required us to provide a number of disclosures within the fiscal year 2020 for 10-K.
Vanessa Bowman: And that's what we were working through that process on October 17th.
Vanessa Bowman: It's determined that there was a need to report our business in three reportable segments.
Vanessa Bowman: Americas International in Australia, Denmark stake.
Since the one consolidated segment that had been reported for S and definitely see previously.
Vanessa Bowman: Each represented total fee growth sold globally.
Vanessa Bowman: That process is now complete and was.
Vanessa Bowman: Reported completely in todays 10-K filing.
Vanessa Bowman: I believe is that it is also important to note that there were no errors in the consolidated financial statements for any of the past 10, Qs or today's 10-K filing.
Vanessa Bowman: These were simply omissions in the footnote disclosures for geographical segment reporting.
Vanessa Bowman: With that said as usual we included a full breakdown of both the quarterly and annual.
Vanessa Bowman: Results in today's press release.
Vanessa Bowman: We also provided a detailed reconciliation to non-GAAP adjusted operating expenses.
Vanessa Bowman: Adjusted net losses.
Vanessa Bowman: And adjusted EBITDA.
Vanessa Bowman: Again, both on a quarterly and annual basis.
Vanessa Bowman: I will provide details on the key areas on the banks that were drivers of the year throughout our call today, but I am of course available to answer any additional questions you might have.
Vanessa Bowman: With that let me start with revenue.
Vanessa Bowman: For the year total revenue was $60 4 million compared to $73 5 million last year.
Vanessa Bowman: Breaking it down further.
Vanessa Bowman: Sorghum sales were $20 3 million versus $18 5 million last year, which is an improvement of $1 9 million.
Vanessa Bowman: This double team was $10 9 million versus $6 5 million, just a year ago, which accounts for an increase of 68%.
Vanessa Bowman: Or $4 4 million.
American Sports sales were $9 9 million for the year compared to 10.8 million last year.
Vanessa Bowman: International sales were $29 1 million compared to 43.6 million last year.
Vanessa Bowman: Which is a decrease of $14 5 million.
Vanessa Bowman: Please note that we also had service revenue of $1 1 million, primarily tied to B B O, which we discussed in the past.
Looking at it geographically.
Vanessa Bowman: We had a $4 4 million increase in <unk>.
<unk> sorry gum revenue this was offset by a 2.6 million decrease in non traded sorry from sales in the U S.
Vanessa Bowman: As we transition customers to the trading platform.
Vanessa Bowman: We also had a $1.6 million increase in dormant and non dormant alfalfa sales in the United States.
Vanessa Bowman: [noise] offset primarily by a $1 5 million decrease in Mexico of NN.
Vanessa Bowman: Non dormant alfalfa sale.
Vanessa Bowman: Internationally, we had a $11 4 million decrease in non dormant alfalfa sale in the Middle East North Africa Armenia.
Vanessa Bowman: Due to the ongoing conflict in Sudan reduced sales until idea and the import restrictions enacted in Saudi Arabia.
Vanessa Bowman: We also saw $2 8 million decrease in the Australian domestic market across all cross segment and lost sales due to inventory quality and lower pricing in the marketplace.
And a $1.6 million decrease in sales to Asia of Alfalfa and sunflower.
Vanessa Bowman: Largest component of the $1 6 million decrease weapons sunflower at 850000 down versus last year.
Vanessa Bowman: We were in a sold out position on supply.
Vanessa Bowman: These decreases were offset by a 1 million increase in grain sorghum to South Africa.
Vanessa Bowman: Key points here are clearly the positive growth in the Americas led by our transition of <unk>.
Vanessa Bowman: Customers to our higher margin double team sorghum hybrid.
Vanessa Bowman: Set by the pullback internationally.
Vanessa Bowman: I do want to point out that there was a severe and abrupt shift in the Mena markets well beyond what we had expected when we communicated with you during our May conference call.
Vanessa Bowman: In particular, there were more than 5 million in orders set to go to Saudi Arabia that were essentially canceled due to the import restrictions enacted we also saw an additional two and a half million in Libya drop in sales due to reduced market demand for alfalfa.
Vanessa Bowman: Now turning to margins gross profit margin for fiscal 2024, with 26, 2% compared to 19, 8% in 2023 and improvement of 640 basis points.
Mark Harmon: As Mark mentioned this was above our stated company wide outlook for the year of 24% to 26% gross margin.
Mark Harmon: The improvement was primarily driven by increased sales of higher margin, Double-team, Florida, which boosted margins by six three percentage points.
Mark Harmon: As well as improved focus on inventory management, and reducing operational costs, while increasing efficiencies in Essen w's production facility, which boosted margins by an additional 3.9 percentage points.
Mark Harmon: These gains were offset by decreased sales of low margin sorghum, Sudan forages in graphic.
Mark Harmon: With a lower non dormant alfalfa driving reduced margins by three four percentage points and lower volumes in the Australia domestic market, providing an additional 0.4 percentage point.
Mark Harmon: So while we saw a reduction companywide in revenue our gross profit in dollars for the year was up by $1 3 million.
Mark Harmon: Another way to look at gross small gross profit margins and dollars is by looking at Americas versus international.
Mark Harmon: The Americas, which includes sorghum and Americas forages had gross margins in fiscal 2024 of 29% compared.
Mark Harmon: Compared to 16% last year.
Mark Harmon: Oregon on its own had gross profit margins at 48% I forget.
Mark Harmon: Which as a reminder includes both our double team and conventional non traded product.
Mark Harmon: Cost of sales, excluding LCM provided a savings of 2 million year over year.
Mark Harmon: And $2.6 million in savings, including LCM year over year.
Mark Harmon: This is directly attributable to the cost savings initiatives and working capital management, we have discussed throughout the year.
Mark Harmon: All told gross profit dollars for the America was $9 2 million compared to $5 million last year.
Mark Harmon: Now, let's transition to operating expenses.
Mark Harmon: Operating expenses for fiscal 2024, excluding a three and a half million impairment for Australia domestic.
Mark Harmon: $30 million compared to Opex of $32 5 million last year.
Mark Harmon: Again this was below our stated outlook of 32, and a half million for Opex in total.
Mark Harmon: Breaking it down a bit we saw a 1.2 million improvement from research and development expenses.
Mark Harmon: A 700000 improvement in selling general and administration expenses.
Mark Harmon: And a half a million improvement and depreciation and amortization.
Mark Harmon: As you will see in the press release, we incurred a three and a half million impairment, which relates to the impairment of customer relationship and the intangible associated with customer lists and Australia that resulted from mix long lived asset impairment testing.
Mark Harmon: This amount was a noncash charge.
Mark Harmon: With the ongoing D. A process I will defer any go forward outlook for operating expenses until that process is concluded again that is expected to occur in November.
Mark Harmon: EBITDA.
Mark Harmon: Now as we look at adjusted EBITDA for 2024, it was a negative <unk> 8 million compared to adjusted EBITDA of negative $9 3 million in fiscal 2023, an improvement of 800000.
A full reconciliation is available in the press release.
Mark Harmon: So despite the significant impact of lower revenue from our Australian domestic and international operations. There was an improvement in gross margin of six four percentage point.
Mark Harmon: The increase in gross profit dollars of $1 3 million.
Mark Harmon: And a decrease in operating expenses of approximately 1 million.
Mark Harmon: Net of the impairment would be Australia domestic business.
Mark Harmon: Positively contributed to the improvement.
Mark Harmon: Our adjusted EBITDA.
Mark Harmon: Finally on the net income line GAAP net loss for fiscal 2024 was a negative $30 1 million.
Mark Harmon: Or negative 70 cents per basic and diluted share compared to GAAP net income of a positive $14 four 9 million or a positive 34 cents per basic and diluted share in last fiscal year.
Mark Harmon: Please remember that we generated a $38 2 million income in last year's third quarter due to the sale of our business interests as part of the B B O transaction.
Mark Harmon: As discussed in previous calls, we will incur a loss of equity method due to our interests and the B L. In 2024 that amounted to $2 6 million.
Mark Harmon: This is a non cash expense to F. N W. And we have provided a reconciliation in our press release not only for adjusted EBITDA, but for non-GAAP adjusted net losses as well.
As a reminder, we received a 6 million payment from shell in February of 2024, and a combined payment from our triangle J D.
Mark Harmon: One 4 million in Q3 as well.
Mark Harmon: Despite our negative adjusted EBITDA, this past year, which translates rather closely to our cash utilization the payment from shell and triangle largely covered any operating cash needs. This year.
Mark Harmon: Yeah.
Speaker Change: As Mark stated with an expected outcome for the VA process in November it is our intent to provide a detailed outlook for our go forward operations. During the release of our first quarter fiscal 2025 in mid November 2024.
Speaker Change: I do want to point out however that as in diabetes Australia's entry into be a constitute an event of default.
Speaker Change: And automatic acceleration S N W. Australia's obligations under its debt facilities with National Australia Bank or Nab.
Speaker Change: Or whether that's acceleration is stayed or paused, while F N W. Australia, it's under be yet.
Speaker Change: The Nab debt facilities are guaranteed by F. N. W. You see up to a maximum of $15 million, Australia dollars or about 10 million U S D.
Speaker Change: As of June 32024.
Speaker Change: S N W debt obligations under this are not subject to a stay in connection with us and W. Australia B.
Speaker Change: F N W is working collaboratively with administrators and the Nab on a resolution by November of 2024.
Speaker Change: S N W. Australia's entry into be a also constitute an event of default under S. M W's amended and restated loan and security agreement with CIBC Bank.
Speaker Change: Because of our cross default provision in Essen debuts loan agreement with CIBC that is triggered by the event of default under NAV debt facility.
Speaker Change: S and W. I obtained a waiver from CIBC.
Cross default event on July 31, 2024, and communicate frequently with CIBC on the progress of S. N debuts activity with the administrators and the Nab throughout the V a process.
Speaker Change: Again. This process is expected to be concluded in November we will provide information epic as it becomes available through our SEC filings.
Speaker Change: One final point I do think it's important to make is that from a cash conversion standpoint, we improved our ability to collect on sales outstanding by an average of 20 days year over year.
Speaker Change: Again, I'm happy to follow up with any of the details. We went through if you should have any additional questions.
Speaker Change: With that let me turn the call back over Tomorrow.
Thank you Vanessa.
Speaker Change: Couple of quick recaps before we turn it over to your questions. Our Americas business is by enlarge hitting nearly all the objectives. We had for those operations at the beginning of the year are double team sorghum trade technology solution.
Speaker Change: The rapid growth and adoption, we expect at the beginning of the year visits introduction just three years ago. It is expected to be on 10% of grain sorghum acres. This year.
Speaker Change: With this growth and double team and improved focus on inventory management, reducing operational cost, while increasing efficiencies and that's N. W. Production facilities are gross profit dollars increased year over year, despite the pullback internationally.
Speaker Change: If the Americas were a standalone operation gross profit margins would've been 29% in fiscal 2024 up from 16% last year.
Speaker Change: This improvement.
Speaker Change: They become more pronounced in the years to come is treated technology becomes the majority of our Americas revenue.
Speaker Change: Beyond double team, we continue to invest in the future of sorghum technology with D. T. Two basic free and stacked offerings coming in the near future.
Speaker Change: As we look to fiscal 2025, we are laser focused on the continued growth and expansion of our dental team operations in the Americas, while working towards an outcome within our international operations.
Speaker Change: With an expected outcome for the VA process in November it is our intent to provide a detailed outlook for our go forward operations. During the release of our first quarter fiscal 2025 in mid November 2024.
Speaker Change: As always I am appreciative of the continued interest and support in S. N W. With that said I look forward to taking your questions.
Speaker Change: Operator.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you're using a speaker phone please pickup your handset before pressing the keys.
Speaker Change: Who withdraw your question. Please press Star then two.
Speaker Change: Today's first question comes from Ben <unk> with Lake Street. Please go ahead.
Speaker Change: Alright, thanks for taking my questions.
Speaker Change: Australian operation.
Speaker Change: Yeah.
Ben: Listening to your prepared remarks, so if I'm, making you repeat yourself I apologize, but you broke down the Australian business revenue contribution did you break down the.
Speaker Change: EBITDA loss embedded within Australia.
Speaker Change: If so what was that number and if not can you help give us some kind of general guidelines on the relative scale of losses there.
Speaker Change: Yeah. So again the 10-K also includes the segment reporting.
That is needed for that reconciliation of EBITDA losses, and when you look at the let me get to it here.
The breakdown, what let me follow up give me a couple of minutes to pull up the 10-K that answering your question accurately but it up in the 10-K, Okay and that's fine I haven't seen the 10-K, yes. So so no we havent drilled that we file it today yep.
Okay.
Speaker Change: All of that up and if you have another question, we can address that but let me definitely good I'll defer on that but that's not a problem yeah no problem.
Speaker Change: The other question you have.
Speaker Change: Bird to the liability associated with that business once it would be.
Speaker Change: The process is completed the 15 million Australian dollars $10 million.
Speaker Change: So at this point.
Speaker Change: Doug.
Speaker Change: Does it it feels like Youre comfortable that kind of the Max liability associated with Australia. Once this process is done.
Speaker Change: Is that number.
Can you really help us understand the conviction that you have regarding that is kind of the maximum liability or kind of.
Speaker Change: What wiggle room, there may be too bad number here is the process is completed.
Speaker Change: Yeah.
Speaker Change: So through the VA process again the administrators.
Speaker Change: I'm asking on behalf of creditors right and so what we understand today as part of the process that is set to close here.
Speaker Change: November is that there is the sale of the Australia business and so what the administrators do is obviously for sale.
Speaker Change: The outstanding amounts due to creditors are within the Docker agreement and I believe all of those terms and conditions are outlined today and the Doctor agreement.
Speaker Change: And then for S. N W. In Nevada, what we are seeking as a resolution to the guarantee which is as you stated 15 million Australia dollars translates to about 10 million U S. D B.
Between us and W, Nevada, and map and that's what we continue to work towards you know for the conclusion of the eye.
Speaker Change: As the sale the potential sale of the business and that works screen continues to <unk>.
Speaker Change: Mindful of word with.
Speaker Change: That sounds like not so good.
Speaker Change: Two are correlated and on what we can say.
Speaker Change: So today then is that you know discussions there are progressing to close this in November.
Speaker Change: Okay.
Speaker Change: Very good.
Speaker Change: I understand.
Speaker Change: Your comments about.
Speaker Change: Providing 25 guidance here on the upcoming in the first quarter call, but I was wondering if we can just talk a bit about kind of the high level outlook for the Americas.
Speaker Change: Given that you're not going to have the benefit of.
Speaker Change: The cash flows coming in from D. B L.
Speaker Change: The.
Speaker Change: The wheat JV this year.
Speaker Change: You know if you've got improving operations in the Americas.
Speaker Change: You know by adult.
Speaker Change: Curious between the available liquidity you have and those include operation and agree to what you feel comfortable with your capital.
Speaker Change: Access to capital.
Today, or if you feel like there's a material shortfall in your America operations given their hours.
Speaker Change: Yes, as we stated earlier band, we're not prepared to give you know even a range of outlook, but what we do know and and as Mark talked about it and Marc if you want to add some comments, we will experience continued growth in our double team platform.
Speaker Change: We have the prospect free a pilot for that trait occurring as we speak for fiscal year 2025, we continue to operate within our cost disciplines that we executed in 2024.
Speaker Change: And then there is continued opex discipline in and the valuation of expenses.
Speaker Change: To determine you know wants to be a is concluded mm theres a shedding of certain operating expenses that are had held at the corporate level that we need to evaluate again, the terms and conditions of the a well.
Speaker Change: Well influence that and so we need to work through them any obligations that is.
Speaker Change: We transition that subsidiary to a potential new owner.
With all of that said, we're also are in discussions with a new lender. So funding is not a concern for us as we lead into 2025 and then it all just continues to be a part of our working capital management.
Speaker Change: Our cost discipline that we executed in 2024.
Speaker Change: And again, then we'll be more prepared him here mid November when we release, our Q1 results.
Speaker Change: You have this call to provide more specifics around the Americas business and what those growth targets are for both EBITDA as well as double team and plastic free.
Speaker Change: Mark.
Yeah, Ben we did communicate in a in this call and on the documentation that we are expecting next year double team will grow to 13 to 15.
Speaker Change: <unk> share of the U S soda makers. So we fully believe the continued demand and growth in farmer positive experience is there and obviously harvest is well underway and finishing so we've got a great picture as far as the performance is going to keep driving that demand.
Speaker Change: And then we will also have continuing operational improvements the cost of goods improvements made last year.
Speaker Change: Package, just a percent of the volume that was actually sold in the last year. So that carry in inventory and also is that an improved position going into this year and a larger percent of the total sales will have improved our cost of goods sales.
Speaker Change: Pact and then as we look at inventories with our plan at.
Speaker Change: At the end of this year, we'll end up with a very what I would consider an optimal inventory carryout.
Speaker Change: Which will also improve cash flows so I believe the operational pieces of the business will continue to improve in the Americas business as we go into next year and then the following as well and on the press sick free last year was the pilot. So this year is a full launch of our pressing freezer, we fully anticipate that continued.
Speaker Change: Yeah.
Speaker Change: Growth of pressing free in the market as well.
Speaker Change: Very good I appreciate those are that color from both of you and Mark you just address the last question I was going out. So appreciate that look forward to the Q1 call coming up here in a couple of weeks and I'll get back in queue.
Speaker Change: Thank you for your questions Ben.
Speaker Change: Thank you and as a reminder, if you'd like to ask a question. Please press Star then one.
Speaker Change: And this concludes our question and answer session I would like to turn the conference back over to the management team for any closing remarks.
Speaker Change: Well I want to thank all of you for joining the call today and many thanks to everyone for participating we look forward to hopefully speaking with all of you again shortly.
Speaker Change: Have a great day.
Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation.
Speaker Change: May now disconnect your lines and have a wonderful day.
Speaker Change: [music].