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

Sep 18, 2019 • 11:00 am ET


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


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Matthew K. Szot

of credit, giving us significant flexibility.

Now the recent transaction does create a near-term disconnect between our operating infrastructure and our revenue base, which we expect to result in negative EBITDA as we move into fiscal 2020. Without going into too many details, we are expecting a return to positive EBITDA in 2021, simply from our organic operations, and that should give you a sense of the opportunities we believe are present in our core organic operations. If we complete the strategic acquisitions available to us and leverage off of our existing platforms, we believe there is significant opportunity in the coming periods.

Now, a couple of quick items before I turn the call back over to Mark. As you can see from the balance sheet and in line with what we communicated on our May 23rd call, we utilized the initial proceeds from the Pioneer agreement towards the paydown of our lines of credit. As of today, we have zero drawn on the US line and $9 million drawn on our Australian line. These lines of credit remain in place with a significant amount of unused borrowing capacity, which will help fund our future growth initiatives.

Now I know I went through a lot of detail here, so please feel free to ask any questions if there is a need to clarify anything discussed. With that being said, let me turn it back over to Mark.

Mark Wong

Thank you, Matt. So let me just summarize the call today. We're looking for 2020 to be another spectacular year for S&W. We think that, as Matt has described, we strengthened our balance sheet significantly, and we removed some of the inventory risk in the sense that all of the dormant inventory has been sold as part of the transaction with Corteva. We think that integration is going well. We are expecting, like I said, double-digit growth in alfalfa and sorghum for 2020.

We think that our new organization, which focuses on local markets, so in the Americas, sorghum and alfalfa are the two most important crops, but internationally, David's team is selling not only alfalfa and sorghum, but also sunflower and wheat. And so, we have one sales force selling all of those different species in each of the appropriate markets. We don't have two sales forces out there. We have one sales force -- one S&W sales force selling all of our products now.

And we're reaching out to our farmer and distribution customers to tell them that that's what we're doing and to show them what our breeding programs have produced in terms of performance in the farmers' field of new hybrids and varieties for all those crops. We expect that there will be continued acquisition opportunity. The market -- the ag markets are difficult, and many companies are struggling. We are one of the few that are in acquisition mode, and we have more deal flow than we can -- that we could ever close. And we have a