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SANW : First quarter revenue better than expectations

By Ian Gilson, PhD, CFA


S&W Seed (NASDAQ:SANW) announced its first quarter results and held a conference call on Thursday November 09, 2017.
Revenue was better than expected at $10.7 million versus our expectations of $10.0 million. Gross margins improved from year ago levels and operating expenses were only slightly above last year's quarter. The net impact was that operating loss was less than we had expected.
Adjusted EBITDA was essentially unchanged from year ago levels, a negative $0.967 this year and a negative $0.971 last year. S&W Seed still expects adjusted EBITDA of between $4.0 and $5.5 million for the year. The revenue target range remains at $75 to $80 million.
The Central California alfalfa crop was harvested during the first quarter so, as expected, both inventory and accounts payable increased. Based on the dollar value of inventory, the highest for many years, the crop was a good one.
Both sunflower and sorghum are moving towards full scale production. Seed sales have started and seed is being planted for seed production and trials.
Senior management stated that stevia has moved to the front burner. A three year collaboration agreement with a major company to develop stevia plants with specific traits (possibly one of the varieties that have been patented) is under way. 
The company filed its 10Q at the same time as the 8K was filed so we have the geographical breakdown of revenue. Libya was back in the market as was Mexico. Australia was flat with a year ago, which was a good effort since a significant part of Australian sales end up in Saudi Arabia. The US did better than last year, possibly due to late buying from the 4Q17.


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