S&W Seed Company (NASDAQ:SANW) Q4 2019 Earnings Conference Call - Final Transcript

Sep 18, 2019 • 11:00 am ET

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S&W Seed Company (NASDAQ:SANW) Q4 2019 Earnings Conference Call - Final Transcript

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Executive
Mark Wong

were able to do all that at probably $0.30 kind of sales price versus what the assets have cost us if the company has not been in so much difficulty financially.

So that was a huge opportunity for us, which we were able to complete. It was a competitive process. So we had a big European company that we outbid for the asset. So we were very pleased to acquire those assets that I just summarized in the Chromatin acquisition.

In addition, I think we showed in 2019 that we were not just the guys who could buy things at the right price, but we were also people who understood how to sell things at a good price. And so, our second transaction was the sale of alfalfa assets that we had acquired about five years ago for under $30 million. We sold those back to the original seller that we bought from now reorganized into Corteva. Corteva decided they wanted to be back in the alfalfa business, so we cut a deal with them where we basically kept the production plant again and the research facilities and all of the germplasm so that we could restart our alfalfa business in the Americas and in the rest of the world. And what we sold back to them was really the remaining production years on our contract and the profits that would have been earned from that and a couple of research selections out of our existing research program. But there remains in that program plenty of new products for our own customers that will be different from the ones that Corteva is selling. And we basically sold them -- all of the inventory that they would need for the next three years. So, the sum total value of that transaction was about $70 million, $25 million in inventory and $45 million for the license varieties in the production contract.

It just appears to me that given that the market's -- given the market's valuation of the company that this was a tremendous sale by S&W, it allowed us to really finally get our debt paid off and give us some room in our balance sheet to make future acquisitions, which has always been our plan. And it left us also with all of the assets that we need to continue our alfalfa business all around the world and it allowed us to focus our alfalfa business at least in the Americas through a much improved sales and marketing organization that was part of the acquisition.

So, we were extremely pleased by both of those transactions, one buying assets, one selling assets. I just like to mention a third transaction that wasn't done in the 2019 fiscal year, but we've announced it on August 30th, 2019. We purchased the paid up -- exclusive paid up license, a 15-year license for wheat varieties in Australia from Corteva. It was a program that seven or eight years old probably has roughly $17 million