S&W Seed Company (NASDAQ:SANW) Q1 2024 Earnings Call Transcript

Page 2 of 2

So it could actually offer more stability longer term to that marketplace. So it’s something we’re going to monitor very, very closely. We’ve chosen not to participate in the low margin. We’ve got high quality and very high valued varieties in our lineup, and we’re working to maintain our pricing position on them to drive profitability versus volume plays or purely revenue plays. But it’s something we’re going to have to monitor both for the region and then also for the change in the alfalfa market in general. But I see the longer term change signaling more positive future than not, but the short term having potentially some volumes out there that could drive margins down.

Benjamin Klieve: Got it. Helpful comments. Thanks, Mark. One more from me and then I’ll get back in queue. You called out Prussic Acid being planted between the several thousand acres this year. Can you characterize that level of acreage, how much you have earmarked for ongoing R&D or testing type uses versus inventory build for ahead of the commercial launch?

Mark Herrmann: Yeah, we really didn’t build any plan for production for just inventory build for next year because we can build that into a production plan as we look forward right now for next year sales, for 2025 sales. So really, all the volume that is being targeted for production this year was either going to be for broader grazing trials, customer views, as well as testing pieces, which is why we positioned it as a pilot launch. And then we’ll be ramping up production as we look at next year for a broad farm, broad acre launch as we move forward. And it is a technology, particularly in the forage sorghum side, we’re really excited to see come forward. And it also offers us a stacking opportunity to quickly add DT and Prussic Acid free to forage sorghum, which I think will continue to add to the product value to farmers, as well as the margin opportunity for S&W. Got it.

Benjamin Klieve: OK, that’s helpful. Very good. Well, good start to the year, it seems. I appreciate you taking my questions and I’ll get back in queue.

Operator: [Operator instructions] And ladies and gentlemen, at this time, in showing no additional questions, I’d like to turn the floor back over to management for any closing remarks.

Mark Herrmann: Well, one, I appreciate everybody joining. But I didn’t get a question on it, but as we were going through the conversation, I thought a point that maybe could have been brought up. The leadership team at S&W are taking significant moves also in implementing cost savings efforts. And I know for this year, we’ll only get a portion of those cost savings because they’re being implemented mid-year. As we go forward, they should be significant contributors to what Vanessa pointed out, that as we look to to next year as well, we should be moving into a cash positive or profitable position as well. As we look at next year, there’ll be full year contributors to our overall results, which we’re also very excited about moving forward. But again, I want to really thank everybody for joining the call and look forward to ongoing discussions as we move forward.

Operator: Ladies and gentlemen, with that, we’ll be concluding today’s conference call and presentation. We thank you for joining. You may now disconnect your lines.

Follow S&W Seed Co (NASDAQ:SANW)

Page 2 of 2