Q1 2025 S&W Seed Co Earnings Call
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Speaker Change: Good morning and welcome to the S&W Seed Company Preliminary First Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode.
Speaker Change: If you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: Please note, this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytton Partners. Please go ahead.
Robert Blum: All right, thank you very much, Operator, and thank you all for joining us today to discuss S&W Seed Company's Preliminary First Quarter Fiscal Year 2025 Financial Results.
Robert Blum: for the period ended September 30, 2024. With us on the call representing the company today is Mark Herrmann, company's chief executive officer, and Vanessa Baughman, the company's chief financial officer. At the conclusion of today's prepared remarks, as the operator indicated, we will open the call for a question and answer session.
Robert Blum: If you dial into the call through the traditional teleconference line, please press star then 1 to ask a question. 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.
Robert Blum: Before we begin with prepared remarks, please note that statements made by the management team of S&W Seed Company during the course of this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Robert Blum: 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.
Robert Blum: Listen to the caution 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.
Robert Blum: including the risk 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 September 30th 2024 and other filings subsequently made by the company with the Securities and Exchange Commission.
Robert Blum: The preliminary results discussed on this call are based on management's initial review of the company's results as of and for the quarter ended September 30, 2024 and are subject to revision based on the company's quarter-end closing procedures and the completion and external review of the company's quarter-end financial results statements.
Robert Blum: Certain details largely pertaining to the VA process, which are expected to impact financial results below the continuing operations line, are not provided in today's announcements.
Robert Blum: Actual results may differ materially from these preliminary results as a result of the completion of quarter-end closing procedures, final adjustments, and other developments arising between now and the
Robert Blum: results are finalized, and such changes could be material. In addition, these preliminary results are not a comprehensive statement of the company's financial results for the quarter ended September 30, 2024, should not be viewed as a substitute for full financial statements prepared in accordance with generally accepted accounting principles and are not necessarily indicative of the company's results for any future period.
Robert Blum: Please note that the accounting requirements for reporting the S&W Australia business
Robert Blum: going forward, will be classified as a discontinued operation upon entry into VA on July 24, 2024. Accordingly, the company's preliminary consolidated financial information for all periods presented reflects the S&W Australia business as a discontinued operation.
Robert Blum: Finally, to supplement S&W's financial results reported in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, S&W will be discussing adjusted EBITDA on this call. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measure and are not prepared under any comprehensive set of accounting rules or principles.
Speaker Change: The operator indicated an audio recording and webcast replay for today's conference call will also be available online and on the company's investor relations page With that said let me turn the call over to Mark Herrmann, Chief Executive Officer for S&W Seeds Company. Mark, please proceed.
Mark Herrmann: Hey, thank you, Robert, and good morning to all of you. I'm excited to be speaking with you all today. To set the agenda for the call this morning, I will first touch at the high level on an update of the VA process with our Australian entity.
Mark Herrmann: With this process nearing completion, I will then provide an overview of the Go Forward S&W, which consists primarily of our U.S.-based operations, including our industry-leading sorghum trade portfolio with Double Team and Presic Acid-free sorghum solutions, along with our BBO joint venture with Shell.
Mark Herrmann: Finally, Vanessa will provide a detailed review of the financials, including our Fiscal 25 guidance. We will then look to take any questions that you might have at the end of the call.
Mark Herrmann: which includes our Sorghum operations led by our Double Team Traded Technology Solution as well as alfalfa primarily in the U.S. and the broader Americas have contributed solid revenue growth and increasing gross margins over the past year. For example, Double Team grew 68% last year from $6.5 million in fiscal 2023 to $10.9 million last year and contributed gross margins of approximately 70%.
Mark Herrmann: Conversely, our Australia-based operations have experienced ongoing challenges in the current market environment.
Mark Herrmann: As recently as a few months ago, these challenges were amplified by the lack of viable strategic alternatives to Saudi Arabia's recent discontinuation of import permits for alfalfa seed and all forages and the increased risk that SMW Australia would be unable to meet its debt obligations.
Mark Herrmann: On July 24, 2024, our subsidiary, S&W Australia PTY, had entered a voluntary administration
Mark Herrmann: VA is a process designed to assess a company's financial situation and operations and explore options to provide a better return for creditors.
Mark Herrmann: I can say this process has resulted in providing the resources needed to create a going concern for all entities.
Mark Herrmann: Once VA is completed, SNW will be exclusively focused on its core U.S.-based operations, which, as I mentioned a moment ago, is led by our high-growth, high-margin sorghum trade portfolio led by Double Team entering its fourth year of sales, with trade adoption planted on 10% of U.S. grain sorghum makers in 2024, along with planned launches in motion for DT2 and prussic acid-free sorghum solutions.
Mark Herrmann: As I have stated in the past, the enthusiasm of growers towards Doubleteam is extremely high. In 2024, we estimate Doubleteam was planted on approximately 10% of all sorghum acres in the United States, up from approximately 6% in 2023. As we look to next year, our expectations are that Doubleteam will be on 12 to 14% of grain sorghum acres.
Speaker Change: Vanessa will get into the guidance in more detail but our expectation is that Double Team will be more than a third of our revenue this year as total revenue in the future continues to shift more towards our robust Sorghum technology portfolio.
Speaker Change: including product line extensions and new technology offers offerings planned over the next year. We expect to see continued top line and margin expansion in support of our near-term goal of profitability.
Speaker Change: with this earnings call coming less than three weeks after our year-end call.
Speaker Change: without going into the same level of details I did on that call, let me just remind everybody on the key initiatives we have in place to drive our broader Sorghum technology business going forward and expand our profitability.
Speaker Change: First, we continue to build a robust commercial infrastructure to drive continued market share adoption going forward.
Speaker Change: Today, we are working with S&W Sorghum Partners brand seed, as well as over 15 independent seed companies in the U.S. market have signed on to an in-license of our sorghum traits, providing their grower customers the benefits of S&W sorghum traits in their seed brands.
Speaker Change: Second, 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 goods, including production, and then report gross sales as grower point of sales.
Speaker Change: We believe this model will contribute to continued market penetration growth.
Speaker Change: Third, we have adjusted our sales and marketing efforts to ensure S&W is supporting all seed brands representing our technologies in the market.
Speaker Change: This includes focusing our organization on activities that support all C companies' success with S&W's sort of traits. With their customers to contribute to this, we have realigned the S&W sales organization's job focus as well as job titles to S&W technology reps.
Speaker Change: Fourth, we're making great progress with our global partners, completing chemistry trials and registrations in key global sorghum markets, as well as licensing agreements with global sorghum-independent seed brands.
Speaker Change: If 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.
trait this year. As a reminder, DT2
Speaker Change: will allow a broader application window to growers to control grassy weeds in their sorghum crop through an over-the-top application.
Speaker Change: and prussic acid-free sorghum is designed to remove naturally toxic metabolites from stressed sorghum for safe, worry-free grazing and hay.
Speaker Change: This will also lead way to the introduction of our first stack trait by combining double-team and prussic acid-free into a single seed option which continues to add value to farmers' sorghum production acres.
Speaker Change: High-value trade solutions will be the key driver for S&W's long-term success as we are becoming the key technology provider in Sorghum.
Speaker Change: As we look to the future we will continue selling other forage solutions beyond sorghum in the near term.
Speaker Change: In the Americas, we had about $10 million sales in forages last year. And that number will be relatively the same this year.
Speaker Change: perhaps down about 1 million or so. As a reminder, this is primarily dormant alfalfa seeds sold in the U.S. and non-dormant alfalfa seeds sold in Latin America. This business will continue going forward as part of SNW.
Speaker Change: internationally, including about four million through our U.S. operations into the international markets, and one million that occurred in the 24 days prior to the entry of the VA that went through Australia.
Speaker Change: As we look at the go-forward S&W and Australia-related sales of alfalfa, we'll no longer be part of our consolidated sales.
Speaker Change: and it is unknown whether the sales into the international markets from the U.S. will continue given the transfer of assets into the VA. Vanessa will expand upon this as she relates our guidance.
Speaker Change: Finally, when we think about the new Go Forward S&W, everything related to our biofuel joint venture with Shell remains exactly the same, with us maintaining a 34% minority interest.
Speaker Change: This partnership is focused on development of Pamelina and other oilseed species, from which oil and meal can be extracted for future processing into animal feed, biofuels, and other bioproducts.
Speaker Change: This fall, VBO will be demonstrating camelina seed to farmers, which carries resistance to glucosinate herbicide, an effective broad-spectrum, over-the-top weed control system for camelina.
Speaker Change: Let me turn the call over to Vanessa for a few detailed reviews of the financials, including our outlook and guidance for the upcoming year. I will then provide some brief closing comments and turn it over for any questions.
Thank you.
Vanessa Baughman: Thank you, Mark. Good morning to everyone on the call today.
Speaker Change: Let me first thank everyone for their continued support of SNW, particularly as we work through this VA process.
were outside of management and the board's direct control.
Speaker Change: It is our expectation that with this process coming to a close in November, we will be able to resume our normal cadence of earnings calls and outlooks into the prospects of the business.
Speaker Change: We are currently wrapping up the Q1 fiscal year 2025 quarterly review, where the 10-Q will be filed here shortly.
Speaker Change: With that, let's dive right in on the revenue line for Q1. And as a reminder, Q1 has historically always been a very light quarter for S&W. And based on the new structure, it will continue to be so.
Speaker Change: From a seasonality perspective, we expect Q3 and Q4, which end in the March and June quarters, to continue to range between 65 to 70% of our total revenue.
Speaker Change: Q3 and Q4 will also be the quarters in which the greatest leverage in our business occurs to the bottom line, as many of the fixed costs are absorbed across greater revenue dollars.
Speaker Change: Therefore Q1 and Q2 will continue to be smaller as it relates to the overall year and not as reflective of an annualized and very seasonal business.
Speaker Change: That said, for the quarter, our preliminary revenue was $8.3 million compared to $10.8 million in the prior year's first quarter.
Speaker Change: This comparison only includes revenue for the ongoing S&W America and international ex-U.S. businesses, as revenue for the Australia domestic and international ex-Australia businesses
Speaker Change: was recorded within discontinued ops for the period of July 1st through July 24th pre-VA.
Speaker Change: Recall, our Australian entities entered VA on July 24, 2024, and therefore were no longer under the control of management and were removed from our ongoing business results.
Breaking it Down Further for the Ongoing Business
Preliminary sorghum sales were 550,000 versus 2.3 million last year.
Speaker Change: The revenue last year included some late-season sales that shift in Q1 of fiscal 2024, so the difference is simply timing.
Speaker Change: Preliminary America's forage sales were $3.4 million compared to $2.4 million last year.
Speaker Change: and Preliminary International Ex-U.S. forage sales were $4.1 million compared to $5.9 million last year.
Speaker Change: This difference is primarily due to Saudi Arabia's sales of $2.2 million in Q1 of Fiscal 2024 that did not repeat in Q1 of Fiscal 2025 due to the import restrictions on forage products imposed by their government.
Speaker Change: Please note that we also have service revenue of an estimated $200,000, primarily tied to VBO, which we've discussed in the past.
Let's turn now to our go-forward expectations.
Speaker Change: For fiscal 2025, which ends on June 30, 2025, we expect total revenue to be between $34.5 million and $38 million for the ongoing business.
Speaker Change: This number does include the 4.1 million of international sales recognized in Q1.
as Mark mentioned.
Speaker Change: As we look forward to the GoFord S&W company, it is unknown whether the sales into international markets from the U.S. will continue given the transfer of Australian assets into the VA process.
Speaker Change: customers may demand the germplasm tied to those transferred assets and therefore we would not want to make any assumptions that this international revenue will be repeatable in fiscal year 2026 and beyond.
Speaker Change: Let's break the guidance for the ongoing business down a bit more.
Speaker Change: We expect total Sorghum revenue to be $20.5 million to $23.5 million.
Speaker Change: of which DT will be between $12 million and $14.5 million, and the pilot for prussic acid free sale will be approximately $200,000.
The remainder will be within our conventional trade sales.
Speaker Change: International forage sales are expected to be approximately 4.9 million of which 4.1 million was recognized in Q1.
Speaker Change: and America Forage sales will be between $8.5 and $9 million while other sales will be approximately $500,000.
Speaker Change: On a normalized basis for just the Americas, excluding all international operations from both this year and last year, that would translate into revenue of $29.5 million to $33 million, which would compare to $31 million in fiscal 2024 on a similar basis.
Speaker Change: We expect growth in our high-margin DT offset by slight declines in conventional sorghum and American forages as well as other revenue from the BBO partnership.
while turning to Margin.
Speaker Change: Preliminary gross profit margin for Q1 was 16% compared to 25% in last year's Q1.
Speaker Change: This largely is attributable to no sales in Saudi Arabia in this year's Q1 results compared to a year ago where sales were 2.2 million in Q1.
Speaker Change: Recall that Saudi sales typically would bring anywhere from 22 to 26 percent margins for any given year.
Speaker Change: The better picture comes with the outlook for the fiscal year as a whole.
Speaker Change: We are expecting total gross margins for the ongoing business for fiscal 2025 to be between 33 and 36 percent.
Speaker Change: This would compare to a total gross margin of 26.2 from last year.
Speaker Change: Again, there is a slight nuance here because Q1 did include some of the estimated internal revenue I mentioned earlier.
Speaker Change: If I exclude the international operations and focus solely on the America's sorghum and forage operations,
Speaker Change: So while our revenue guidance shows a slight decrease to a slight improvement from the prior year, on an equivalent non-international basis, you will see that gross margins are expected to increase by 700 to 900 basis points.
Speaker Change: We are expecting real leverage in the model going forward, driven by double-T and the perovskic acid-free trait, which carries margins of around 70 and 30 percent respectively.
Now let's transition to operating expenses.
Speaker Change: Preliminary Q1 fiscal 2025 operating expenses inclusive of depreciation and amortization for the ongoing business in total were $5.6 million compared to $5.7 million last year.
Speaker Change: Looking at it on an annualized basis, our expectation is for total operating expenses, exclusive of depreciation and amortization, dot-based comp, and any one-time charge that may be included as part of VA.
to be about 16 and a half million.
Speaker Change: including depreciation and amortization and stock-based comp, that number will be approximately 21.1 million.
Speaker Change: We've made a number of significant reductions in operating expenses through last fiscal year and leading up to Q1. And we believe we have reached a very reasonable go-forward operating expense structure.
Speaker Change: We still carry about $3 million of costs related to being a publicly traded company.
Speaker Change: But beyond that, we have made significant efforts to align our Go Forward business plan with our expenses to try and drive the business towards profitability.
Now turning to EBITDA.
Speaker Change: Preliminary adjusted EBITDA for Q1 was a negative $3.1 million compared to adjusted EBITDA of negative $1.7 million in last year's Q1.
Speaker Change: As usual, a full reconciliation will be available in the press release once published after our quarterly review is complete.
Speaker Change: Based on the various inputs I provided, we're expecting adjusted EBITDA for the year to be between a negative 5 million on the low end to a negative 3 million on the high end.
Speaker Change: Put differently, with Q1 having already come in at an estimated negative $3.1 million, we are expecting the high end of our range to be at a break-even for the rest of fiscal 2025 in aggregate.
Speaker Change: This is a significant potential milestone if we can achieve our expectations.
With regard to cash flow, just a couple of notes.
Speaker Change: For cash flow, we do not expect to be at a net cash positive position in FY25, given the losses we'll see from the EBITDA range I previously mentioned for fiscal 2025.
Speaker Change: That said, we continue to explore options to reduce corporate expenses and manage working capital through the cost initiatives we launched last year, while we continue to see growth and adoption in our high-margin Sorghum product.
Speaker Change: Also, we are in the process of securing our funding needs through a financing agreement that will remain in place for the next two years.
Speaker Change: We are supported through our CIBC financing arrangement currently through November 30th of 2024 and will provide more information once the new agreement is finalized in early December.
Speaker Change: Again I'm happy to follow up with any of the details we went through if you should have any questions.
Speaker Change: With that, let me turn the call back over to Mark.
Mark Herrmann: Thank you, Vanessa. A couple of quick recaps before we turn it over to questions. With the past 18 months has been marked by significant pressure from our international operations. This is very soon behind us. Going forward, our business is being driven by our high-value, high-margin sorghum trade technology in well-established markets in the Americas.
Mark Herrmann: our DT trait is one of the fastest growth seed traits on the market and we are following that up with DT2 and PAF in our pipeline which we have talked about in the past.
Mark Herrmann: We are making great progress with licensing agreements for our key ex-U.S. markets to further expand our global reach, which will add incremental value to S&W and its shareholders.
Mark Herrmann: And of course, we have a large equity stake in the Shell Biofuels JV, which has a large opportunity ahead of ourselves as we progress into our second year of the JV.
Speaker Change: As Vanessa mentioned, our guidance for the year of negative 5 to negative 3 million incorporates the fact that Q1 already had a negative 3.1 million attributed to it.
Speaker Change: So the remainder of fiscal 2025 is expected to be break-even to just slight potential EBITDA loss.
Speaker Change: With the business dramatically more streamlined from an op-ex perspective and efficiencies in place to drive incremental gross margin improvement in both our traded products as well as our other forage, I believe we are in a position to return S&W to profitability.
Speaker Change: I want to sincerely thank the shareholders for their patience throughout this process. We're dedicated to recognize the value that we believe is inherent in the company to the fullest extent possible. With that said, I look forward to taking your questions.
operator.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2.
Speaker Change: First question comes from Ben Cleavey with Lake Street. Please go ahead.
Speaker Change: All right, I should take my questions. First, just one question on the Australian VA process. Do you still expect that the max liability coming out of the VA process can be 10 million US dollars?
Speaker Change: I can take that question. Thank you, Ben. We are currently negotiating with administrators as they represent creditors, right, which would be inclusive of the NAB as one of the largest creditors to the Australian entity.
Speaker Change: In terms of exposure, again, as we stated in the earnings call today, our focus throughout the entire VA process...
Speaker Change: was to create and go in concern for all entities involved.
Speaker Change: So, while certainly, contractually, the parent company could be obligated to the $10 million USD guarantee that exists in the NAB facility agreement today.
Speaker Change: that would certainly put a burden on the SNW Nevada entity.
Speaker Change: Therefore, we'll have more information as it relates to the parent guarantee once the conclusion of VA occurs, which again should be here shortly this week, we hope.
Speaker Change: facility here but are kind of waiting for the VA process to play out before, you know, before really securing that, you know, in fall. Is that a fair characterization? And do you so you expect to have, you know, real updates on kind of available liquidity, etc., you know, shortly after the VA process is completed?
that would be correct. And as you can imagine,
Speaker Change: Even with our current lender, we've been working with them on the conclusion of VA.
Speaker Change: that again creates a going concern for S&W Minerva and it's America's businesses going forward. So, yes, everyone is anxiously awaiting that conclusion so that we can move forward with our agreement.
Speaker Change: Okay, yeah, no, I'm sure of that. Okay, on cash flow...
Speaker Change: You guys did a really good job of pulling a little bit out of working capital last year to the tune of like $6 or $7 million. Vanessa, what are your expectations for cash flow specific to working capital in CISL 25?
Yes.
Vanessa Baughman: So, improve to the extent that we will not have to support
Vanessa Baughman: our international forage sales as we have done in the past. So there's a natural decline in working capital needs with regard to the supply that we create for that alfalfa business.
Vanessa Baughman: But, we also are expanding our growth, right, in the DT and soon-to-be prussic acid-free lineup of products.
Vanessa Baughman: Therefore, in terms of working capital needs, our cost initiatives continue into perpetuity, right? We continue to strive to be best-in-class from a production standpoint for our sorghum crop.
Vanessa Baughman: And we're making, we continue to make inroads in that effort. So as it relates, if I had to compare year over year, working capital needs on a net basis will be slightly improved.
on a go-forward basis that obviously will help cash flow.
Okay, very good.
Speaker Change: And then on the quarter itself, the prelim results, can everything, you know, everything tracked? My one question that I have is around the domestic...
Thank you.
Speaker Change: forage business. Between that revenue number and then the margins, the gross margins that you're reporting, it seems like margins in that segment specifically may have been a little weaker year over year. Can you comment at all on kind of the status of the American forage business and the margins embedded within the results?
Speaker Change: Yeah, so where we saw a slight decline in oranges from a total sales perspective was primarily in price.
Speaker Change: Again, it goes back to the global supply and demand in terms of what we see, not only in the Americas, but also globally.
Speaker Change: and when it comes to particularly our Latin America market, we saw a slight decline in pricing.
Speaker Change: and to be competitive and sell the volume we had intended, there was a slight margin decrease as a result of our Latin America pricing adjustments that we had to make in the mark.
Okay.
Speaker Change: Very good. And then last one for me, and then I'll get back in queue around double team so that the guide looks
Speaker Change: you know, look to be exactly as you characterize on the...
Speaker Change: on historic hauls. I'm wondering about your expectations for seasonality for that product this year, this fiscal year. You guys had a pretty chunky amount come in the second quarter last year. Do you expect kind of a similar pattern in fiscal 25, or do you expect that to skew more towards the second half of the fiscal year?
Speaker Change: Yeah, so I would anticipate, we've seen orders blitzing up here even over the last week, so I do think we'll see things pick up a bit per second quarter and then third and fourth quarter again we'll still maintain the biggest chunk of the business for DT sales.
Speaker Change: Okay, very good. Well, I appreciate it. Best of luck here wrapping up the VA process. I look forward to that concluding and appreciate you taking my questions. I'll get back in queue.
Thanks, Ben.
Thank you, Ben.
Speaker Change: Once again, if you have a question, please press star then 1.
Thank you. Thank you.
Robert Blum: Operator, this is Robert here. While we wait to see if there are additional questions come in through the traditional teleconference line, we do have some webcast questions. Mark and Vanessa, if you can look to address some of these here, and I'll try to bucketize them in a few different topics here. Mark, perhaps you could expand upon soar makers planted last year, maybe any sort of outlook that you're seeing here for the upcoming year.
Mark Herrmann: Yeah, so connecting with the United Sorghum Producers Association, they really believe there'll be an increase of acres.
geography, which is predominantly key Sorghum geography.
Mark Herrmann: which delayed planning on corn and in many cases delayed planning significantly on cotton.
Mark Herrmann: which then moved to sorghum acres. So a year ago, we had over 7 million acres of green sorghum reported by USDA planted in the U.S.
Mark Herrmann: USDA is reporting right now on their early forecast that it's 6.3 million acres of sorghum planted, which would be a decrease of about 12.5% of sorghum acres. The United Sorghum Producers Association, which are the most connected to sorghum growers and the industry,
Mark Herrmann: are really pretty optimistic about the return of Sorghum Acres in the demand platform.
Mark Herrmann: carry-in stocks look reasonably low and all the market indicators would say it be pretty solid.
the other pieces were changing.
Mark Herrmann: commodity prices across cotton and corn. Both of those are very high input cost crops where sorghum is a much more efficient crop as far as inputs.
fertilizers, nutrients, crop protection, as well as seeds.
Mark Herrmann: When you look at the ROI, Kansas State again came out with their return on investment as they evaluated different herbicide systems and DT sorghum sprayed with First Act.
Mark Herrmann: on all the different trial pieces they looked at, delivered about $1,200 more per unit purchase, per bag of seed purchased.
Mark Herrmann: than the other alternatives in the testing. So we'll have more information on that as harvest data gets completely wrapped up as we look to our next call, but it looks very positive.
Speaker Change: All right, great. A couple of questions here on VBO to the extent that you can...
Speaker Change: look to address these. First here talking a little bit about just sort of the the revenues and how things would flow through. Is there any sort of an estimate would it be fiscal 27 or any timeline in terms of when sort of meaningful revenues would be attributable to the VBO business?
Speaker Change: I know VBO is working on their longer-range plans right now. As you recall, they purchased the herbicide-resistant trait and germplasm from Yield 10 just here this last late winter, early spring.
Speaker Change: So the focus moved to incorporating that trait and ensuring they were used in trials from the material that was acquired and brought in.
Speaker Change: their trials have gone very positive in both performance for the germplasm as well as the trait performance.
Speaker Change: look to be very positive. So their main focus right now is...
getting farmer visibility.
Speaker Change: to see the efficiency of the system and the yield potential of the system, as well as ramping up seed production to put themselves in place. So really right now it's a bit of a gap year as the new technology is coming in, which as you look at the scheme of things, the alternative was putting research together to try to develop a broad spectrum herbicide trade, which most likely would take many or several years to get to.
Speaker Change: to be in place where it can be providing a broad spectrum over the top weed control system this quickly is a really positive step forward.
Speaker Change: Okay, next question here again on VBO, any sort of impacts to potential reduction in subsidies based on the new administration here?
Speaker Change: You know that's a it's a very interesting question and and we'll need to most likely wait to see.
Speaker Change: But I do believe the focus on reducing carbon, efficient systems,
Speaker Change: will still continue to move forward. Key players like Delta Airlines and others have it as core strategic initiatives within their businesses. So the audience is probably assessment of that is probably as good or better than mine.
Speaker Change: But I do believe there's going to be continued focus on renewable fuels and
carbon reducing activities.
Speaker Change: All right, great. Just maybe one or two others here. As it relates to your employee, sort of diversification of structure there, after the VA process is completed, how many of them are sort of local domestic here versus anyone that might be still based internationally?
Speaker Change: you know really there's no impact to to the U.S. business since they were operated as as separate businesses it's a pretty clean clean separation so
Speaker Change: I don't see an impact to this ongoing. Now the reality is the structure for S&W seeds will be much smaller with the separation of the S&W Australia business, but it's a pretty clean break with the VA process.
Speaker Change: All right, very good. And maybe this is more of a technical question someone has here. Can you get two crops a year from sorghum?
Speaker Change: You can get a second crop if you're using sorghum as your double crop option. So if you're putting in an earlier harvest crop and coming back with sorghum, it is possible, but it's in the
Speaker Change: southern portions of the Sorghum region. Now as it looks at the really the business model of camelina, it would allow farmers to put in a fall cover crop of camelina, harvest early in the spring, be able to come back with another crop in that growing year.
Speaker Change: and then get basically three crops out of a two-year period with cover crop for one of those. So there are various options, but there is a market for a double crop.
Speaker Change: sorghum. There's, I don't believe, any markets in the U.S. where you get two crops of sorghum. As we look at South America, there potentially will be some, but we'll be working with other seed companies in South America.
doing trait integration into their adapted germplasm.
Speaker Change: All right, fantastic. I am showing no further questions through the teleconference line here. So Mark, I'll go ahead and turn it back over to you for any closing comments here.
Mark Herrmann: Hey, thank you, Robert. Well, I want to thank everybody for joining us And really appreciate your participation in today's call. We look forward to hopefully speaking with all of you again shortly And thank you