SANW Q4 FY2015 CC Transcript 091615 - S&W Seed Coswseedco.com/assets/SANW-Q4-FY2015-CC-Transcript-091615.pdf · 2018-05-29 · actual results may differ materially from those projected

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Chorus Call Teleconferencing Client Transcript Service

S&W Seed Company (NASDAQ: SANW) Fourth Quarter and Fiscal Year 2015 Financial Results Conference Call Wednesday, September 16, 2015 4:30 PM Eastern CORPORATE PARTICIPANTS Mark Grewal – President and Chief Executive Officer, S&W Seed Company Matthew Szot – Chief Financial Officer, S&W Seed Company Robert Blum – Managing Partner, Lytham Partners, LLC PRESENTATION Operator Good afternoon, everyone, and welcome to the S&W Seed Company reports Fourth Quarter and Fiscal Year 2015 Financial Results conference call. All participants will be in a listen‐only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question, you may press star and then one, to withdraw your question you may press star and two. Please also note that today’s event is being recorded. At this time, I’d like to turn the conference call over to Mr. Robert Blum. Sir, please go ahead. Robert Blum Thank you, Jaime, and thank you all for joining us today to discuss the financial results for S&W Seed Company for the fourth quarter in fiscal year 2015, which ended June 30, 2015. With us on the call representing the company today are Mark Grewal, President and Chief Executive Officer, and Matthew Szot, Chief Financial Officer. At the conclusion of today’s prepared remarks, we’ll open the call for a question and answer session. Before we begin with prepared remarks, we submit for the record, the following statement. 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.

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S&W Seed Company Financial Results Transcript

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.” Listeners are cautioned that such statements are subject to a multitude of risk and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward‐looking statements, 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 June 30, 2014 and other filings made by the company with the Securities and Exchange Commission. With that said, let me turn the call over to Mark Grewal, Chief Executive Officer for S&W Seed Company. Mark? Mark Grewal Thank you, Robert, and good afternoon to all of you. 2015 has been a transformational year for S&W Seed Company, both from an operational and financial perspective. From a financial perspective, we showed strong improvements in nearly every key measurement, particularly in the face of what was a difficult first half of the year within the alfalfa seed markets. In particular, we recorded record annual revenue of $81.2 million, which was an increase of 58% over the prior year. Our annual gross margins improved to 20.8% from 19.4% as seed pricing has improved and our margin enhancement strategies have begun to take hold. Our record annual adjusted EBITDA of $7.5 million equated to a 9.3% adjusted EBITDA margins compared to 6.2% adjusted EBITDA margins last year. And our adjusted non‐GAAP diluted earnings per share improved to $0.12 compared to $0.03 last year. During the fourth quarter, we saw even stronger improvements in gross margins which came in at 21.6% versus 18.6% last year, a 300 basis point improvement. And our adjusted EBITDA margins were 10.6% compared to 8.4% last year. We are very pleased with these strong results and believe that 2016 is setting up to be even stronger. The strength of these results has been driven by our dedication to strategically building this business over the last number of years into a true market leader within the alfalfa seed segment, built upon four key strategic pillars: strong product portfolio, leading edge research and development, a large and diversified production base, and global distribution. The strategic pillars of this business are as strong today as they have ever been, and I might argue, are as strong as any that has ever been created within the alfalfa seed industry. We have a real opportunity to take significant advantage of one of the world’s most utilized crops and drive significant shareholder value over the next number of years. For those of you that know me, you know that this has been my passion and vision for the last five years. And I am more excited today than ever before about the opportunities that lie ahead for S&W. Before I turn the call over to Matt for a review of the financials, let me touch briefly on a few of our strategic accomplishments over the year. First we’ve successfully completed and have integrated our acquisition in DuPont Pioneers alfalfa seed research and production business. This acquisition was a natural product line extension for us. It

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quickly accelerated our dormant capabilities, nearly doubling the size of the company’s addressable market. It also provided a ten‐year distribution agreement with DuPont Pioneer with minimum annual purchase commitments, improving our revenues and earnings predictability. By increasing our presence in the United States that’s dramatically diversified our sales base, while allowing for significant crop‐selling opportunities of the acquired germplasm within our existing distribution base. Importantly, it continues to expand and diversify our production capabilities and contracted lower base as well, with less reliance on any one geographic area for seed production requirements. And lastly, it continues to build upon a key pillar of our organization which is expanded R&D capabilities. I talked about the pillars to which a great alfalfa seed organization is built on at the onset of the call. And as you can see, this acquisition significantly strengthened each one of those pillars. One final point that clearly needs to be made is the exceptional team that came along with the Pioneer acquisition. They have become an integral part of the company that’ll be key components to the team that continue to drive S&W into the future. I couldn’t be more pleased with the way that the acquisition has gone this far. Beyond the acquisition, however, we worked hard throughout the year to organically build upon them as well. Within R&D, we developed key strategic relationships and leading seed development companies including Bioceres and Calyxt, to bring to market next generation varieties to meet the demanding needs of customers around the globe. We also continued to develop next generation varieties. From a production standpoint, within the first few months of having acquired the Pioneer business, we significantly increased the production acreage base to wrap up quantities of seed available for sale next year to drive growth in our dormant operations. We believe there are significant opportunities to grow that business beyond the Pioneer agreement going forward. And, finally, from a distribution standpoint, we added key distributors in Argentina, Pakistan, the United States, and elsewhere to drive continued market opportunities for our leading varieties. Like any agricultural company, we will always be subject to certain factors outside of our control, such as weather and other macro‐related events that can have an impact on Ag markets, much like what we saw over the last 18 months with the non‐dormant markets. But what we have done over the last year to diversify and expand our operations, has put us in a tremendous position to deliver solid results year‐after‐year, with significant upside opportunities. I couldn’t be more pleased with the progress made in 2015. Now let me turn the call over to Matt Szot for a review of the quarterly and annual results. Then I’ll come back and discuss what we see taking place within our end markets and the outlook for the year. Matt? Matthew Szot Thank you, Mark, and thank you to everyone on the call today. Since most of you should have a copy of the financial results in the press release, let me spend some time going through some of the more pertinent details of the quarter and the year and discuss some of the impacts to the financial model on a go‐forward basis.

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Now, before I begin, let me remind everyone that, once again, we completed the acquisition of the DuPont Pioneer alfalfa business on December 31st. The financial statements have not been presented on a pro forma basis and therefore the fiscal 2015 results of operations and statements of cash flow reflect only six months of activity from the combined business. And fiscal 2014 result of operation and cash flow reflect only the legacy business. For the fourth quarter, revenues totaled $28.7 million up from $19.6 million a year ago. As we indicated in our press release today, the $9.2 million increase in the fourth quarter revenue was largely attributable to an increase in sales of our elite S&W varieties coupled with an approximate $4.9 million of incremental sales from our distribution and production agreements with DuPont Pioneer. For the year, revenue totaled $81.2 million compared to $51.5 million in 2014. We had modest organic growth for the year of 3.5%, with the majority of the increase being attributable to the Pioneer distribution agreement. As we look to fiscal 2016, we are anticipating revenues of approximately $95 million. The majority of the increase from fiscal year 2015 will come from contributions from the Pioneer agreement. And as we discuss in the press release, the Australian harvest this year was lighter than previously expected, now, due to the decrease in seed available for sale, we believe we are being conservative with our revenue outlook, until we have more visibility into the April 2016 Australian harvest, as well as our ability to source seed through the open market. As we think about the allocation of revenue throughout the year, please note that the majority of our year‐over‐year growth is coming from sales to Pioneer. Therefore, the majority of the growth will be seen in the third and fourth quarters, which is when shipment to Pioneer takes place. Our legacy business, from a quarterly revenue allocation standpoint should be generally consistent with the prior year. Gross margins during the fourth quarter were 21.6% compared to gross margins of 18.6% in last year’s fourth quarter. The increase in gross margin largely reflects the improved margin contributions from our optimization program as well as improvements in seed pricing. Please note that Pioneer operations represented only 17% of our revenues for the quarter. I stress this as you can see that the majority of the margin improvement is really driven from our legacy business, which we are obviously pleased with. For fiscal 2016, based on the mix of revenues that we see, we are anticipating that gross margins will likely be in the low 20% range. Again, we believe that there can be upside to these numbers if we are able to force and produce certain inventories, but based on our current inventory levels, we want to err on what we believe to be the conservative side for the moment. Adjusted SG&A for the fourth quarter totaled $2.5 million, which was slightly above our previous guidance and compared to $2 million for the comparable period for the prior year. This increase is due to the newly acquired operations. Now we do estimate that SG&A for the first quarter is going to be approximately $2.3 million to $2.4 million.

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Now turning to R&D, during the fourth quarter, R&D expense was approximately $838,000 compared to $194,000 in the year ago period. To remind you, we will continue to invest in our research and development from the robust program that we acquired from Pioneer. We estimate that on an annual basis, we will add roughly $1.7 million to $1.8 million of additional R&D expense on top of our annualized historical spend. So the increase of approximately $450,000 this quarter is entirely due to our newly acquired operations. And as we look to next year, we think approximately $750,000 per quarter is a fair estimate for our R&D spend, obviously pending certain initiatives that we may pursue. Now, as we talked about on the call in January, as well as our earnings calls in February and May, we funded the upfront payment of the Pioneer acquisition with the financing that consisted of convertible debt with warrants and a private placement of common stock to raise a total of $31.7 million in gross proceeds. We issued $27 million of secured convertible debt and $4.7 million of common stock. Through today, we have made principal payments of approximately $8 million on the convertible debt so the remaining balance is approximately $19 million. There is a convertible feature to the note, so that we cannot say with certainty what portion will be converted to equity, but it is our intention to the extent possible to utilize our cash flow from operations to pay down the notes. We incurred approximately $694,000 in cash interest expense during the first quarter, from the convertible debenture and other debt obligations. During 2016, we expect that number to be approximately $2.3 million, of which $1.6 million will be related to the convertibles. This expense will decrease each month as we pay down the remaining balance on the convert, which matures by June 2017. Now, these numbers assume no conversions and we are servicing all the convertible debt in cash. On the last few calls, we also talked about non‐cash interest expenses related to the accretion of the debt discount associated with the derivative warrant liabilities and amortization of debt issuance cost. Under the effective interest method, the non‐cash interest expense is front‐loaded and decreases as principal is paid down. On the income statement, you will notice a line item called Amortization of Debt Discount. That line item combines both the accretion of the debt discount associated with the derivative warrant liabilities and the amortization of debt issuance cost. During that quarter, that number was $888,000 which was in line with our previous guidance. In 2016, these non‐cash charges should be approximately $2.9 million, and then $1 million in 2017, which is the final year. In addition to non‐cash amortization of debt discount, there is another non‐cash charge in the quarter of $314,000 related to the change in fair value of the derivative warrant liabilities. This charge is not an actual cash liability and is strictly a function of the GAAP requirements to mark‐to‐market the estimated fair value of the warrants recently issued. Going forward, we will continue to record gains or losses to the P&L driven by changes in the estimated fair value of the warrant. As you can see from the press release, we specifically break these two non‐cash, non‐operating items, out to provide a non‐GAAP net income and EPS number. In addition to our adjusted EBITDA data, we will continue to provide this number on a go‐forward basis. Now as Mark mentioned at the beginning of the call, adjusted EBITDA during the quarter was a record $3 million compared to adjusted EBITDA of $1.6 million during the fourth quarter of last year. A full reconciliation is included in our press release. Our Q4 EBITDA margin was 10.6% compared to 8.4% during last year’s fourth quarter. Again the ability

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to leverage the operating infrastructure of S&W coupled with the newly acquired operations, should allow us to continue producing strong adjusted EBITDA margins on a go‐forward basis. Now non‐GAAP net income was $614,000 or $0.05 per share compared to $620,000 or $0.05 per share in the fourth quarter of last year. Again, this backs up the non‐recurring one‐time transaction expenses for the acquisition, as well as non‐cash amortization of debt discount and change in derivative of warrant liabilities. Now I know we went through a lot of data here, so if you have any questions please feel free to ask. Let me turn it back over to Mark. Mark Grewal Thank you, Matt. Since our last conference call, we announced our collaboration with Calyxt to supply their next generation gene‐editing technology to research, to develop, produce, and commercialize alfalfa seed products. Caylxt technology allows for custom gene editing of plant species to create various novel traits in a way which is currently classified as non‐GMO. The approach is based on the same principle as classical plant breeding, while allowing for a much more accelerated development timeline. Let me rephrase that, we are hoping to have field and trait development in the field to test within 18 months. This is truly novel technology that we believe will have a far‐reaching application especially within the alfalfa seed industry. I think it’s important to pause there for a moment and understand the value add that S&W brings to this collaboration but also to our agreement with Bioceres, as well as Monsanto. S&W, through its years of leading research and development efforts and now with its broad production base and distribution channels, have positioned itself as a key lynchpin to alfalfa seed biotech research and development. Because we have the agreements with the farmers on the one end to produce the seed and the farmers on the other end to sell the seed to, we are positioned to be a key contributor within the transgenic or biotech seed market that is evolving across the world. When we talked about building the pillars of the alfalfa seed company that can take advantage of the opportunities within the marketplace, it is precisely these types of agreements that we look to, to continue developing, to be a leader in this industry for many years to come. Overall, the market appears to be showing continued strength, there’s really good signs of strength, followed by the softness that took place in the previous two years. The sell‐through of inventories within the distribution channels, coupled with the weak Australian harvest this year, are setting up for a year where the demand for seed appears to be outweighing the supply. We continue to manage our business for the long term and don’t want to overreact to any one trend positively or negatively. But it certainly seems like we will be in an environment of strong pricing during the year. Matt already touched on our outlook for the year, but to reiterate briefly, we expect to record another record year of revenue driven by continued strength with our dormant operations, however being offset by what we believe is a conservative outlook to our non‐dormant operations, due to the weaker harvest out of Australia impacting our available seed for sale and optimization efforts. As more clarity on our seed sourcing opportunities and 2016 harvest come to fruition, we will look to provide an update to you.

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Again, the diversification efforts that we have put in place from a product production and distribution base is allowing us to put up strong results. As I said at the onset and discussed last quarter, the last year has been transformational for S&W Seed Company. We have positioned ourselves to be the market leader in a very important agricultural crop. We have the key pillars in place to drive significant expansion going forward, including a leading product portfolio, research platform, as well as production and distribution base, that we believe is unmatched by anyone else in this industry. We thank you for your support and, now, let’s open up the call for your questions. Robert? Robert Blum Go ahead, Jaime.

QUESTIONS AND ANSWERS Operator Ladies and gentlemen, at this time we’ll begin the question and answer session. To ask a question, you may press star and then one using a touchtone telephone. If you are using a speaker phone we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your question, you may press star and two. Again, it is start and then one to ask a question. We’ll pause momentarily to assemble the roster. And our first question comes from Ian Gilson from Zacks Investment Research. Please go ahead with your question. Ian Gilson Yes, good afternoon, gentlemen. I’ve got a couple of questions. You said that the Australian crop will be lower than expected? Mark Grewal It is lower, it’s already in and it is lower than we thought it would be. It’s a below‐average crop for the year but it also adds a tightness in the supply and demand chain. Ian Gilson Okay. How does that compare with last year? Mark Grewal Matt, do you have the exact numbers? In 2013, we had a record year. Ian Gilson Yes, yes, we know. Mark Grewal Fifteen point six, 11.

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Matthew Szot Thirty‐six hundred last year. Mark Grewal Thirty‐six hundred. Okay. So 7.2 to 8. Matthew Szot It’s down about 30%. Mark Grewal Yes, about 30%. Ian Gilson Several people were talking. Down about 30%? Mark Grewal Let’s look at it a different way. We try to pull out eight million pounds a year on average. And that’s our goal. It was down to, say, around six. Does that answer that one? Ian Gilson Okay. Well, yes, yes. I guess there’s not much you can do about the weather down there. Is that the prime reason or what? Mark Grewal Weather is always a major contributor to the final yields and it could be water irrigation, pollination, heat. So, yes, the weather affects seed and seed is one of the toughest crops and that’s why it’s such a neat crop to be in because very few people know how to grow it and it’s got a barrier to entry. So, it’s one of the things that we’re very excited about and our expertise in that area to allow the right amount of seed to have to do the markets that we want to do in. Matthew Szot Ian, I might add that we have been strategically out there in the marketplace and we’re quietly accumulating other varieties to make up for that shortfall. Ian Gilson Okay, that was going to be my next question, actually. Can you actually take seed from inventory in the US and ship it to customers that would normally have purchased from Australia? Matthew Szot Ian, I would say that the shortfall from the Australian crop is not going to impact our ability to service customers that are being serviced directly out of Australia. What it does do is it limits the amount of Australian seed that we can bring back to the United States for our Optimization Program. So, we are absolutely focused on the Optimization Program, but we are accumulating other lower‐priced point seeds from alternative sources to use in that blended Optimization Program.

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Ian Gilson Are we looking at a reduction in seed sales on a unit basis in 2016 versus 2015? Matthew Szot Yes, volumes will be down but AFPs will be up, as it relates to Australian varieties. Ian Gilson How about overall? Matthew Szot We’re not going to get in to granule details, but we’ve given you revenue guidance of roughly $95 million for next year. Ian Gilson Okay. On the balance sheet, you have a line item called Crop Production Costs, which showed a significant decline year‐over‐year. Why is that? Matthew Szot Yes. Those are the long‐term costs that basically stand establishment costs. And, if you’ll recall, in March 2015 we sold a section of farmland in the Imperial Valley. So, that reduced that number. Additionally, we also entered an agreement for the other roughly 1200 acres that we were farming ourselves or having one of our partners farm on our behalf. Effective June 30th, that grower has taken over those fields and is growing that on a contract basis now. So we’re, in essence, entirely out of our own internally‐farmed operation. Ian Gilson Okay, what happens if— Matthew Szot And they’re reimbursing us for those stand establishment costs and you’ll see that receivable fitting into other assets which is another line item within our long‐term assets. It’s really just moving it from crop production costs to other assets on our balance sheet. Ian Gilson So, where do the costs of Stevia go and what is the current status of Stevia? Mark Grewal The R&D on Stevia is basically $0.5 million a year. Matthew Szot Yes. And it’s hitting the P&L. There’s no Stevia costs on the balance sheet, Ian. Ian Gilson What is the current status of your plant production or leaf production?

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Mark Grewal We’re not in production, we’re only in R&D. So, there’s no revenues coming in right now. We’re working to continue and complete the data that’s necessary for the third patent. So, you notice we’re not speaking about Stevia because it isn’t contributing anything to the company at this time. But, we are continually focused with the group on R&D. Ian Gilson Okay. You have two patents already granted; correct? Mark Grewal No, we have filed a patent pending and we’re working on the third at this time. Ian Gilson Okay. Two plant patents are pending. So, generally you have some plans towards producing or having produced for you some Stevia plants sometime in the near future. Mark Grewal Correct, Ian. What would occur is we would actually, once those patents are completed, would be a royalty‐type and we contract out just like we do seed production. Ian Gilson Okay, great, thank you very much. Mark Grewal You’re welcome. Operator Once again, if you would like to ask a question, please press star and one. To withdraw your question, you may press star and two. And our next question comes from Brett Wong from Piper Jaffray. Please go ahead with your question. Mark Grewal Hi, Brett. Brett Wong Hi, guys. How are you? Mark Grewal We’re good. How are you doing? Brett Wong Doing well, thanks. I just wanted to dig into the margin a little bit here first. So, it’s nice to see an improvement year‐over‐year, but there was a bit of a lower move from quarter‐to‐quarter so I was just

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wondering what the rationale for the sequential decline was. Was there any pricing pressure? Did it have something to do with the variability of the blending initiative? Just any color there is helpful. Matthew Szot I think, Brett, as we’ve tried to articulate in prior calls is that any one particular quarter margins are going to move up and down and that’s simply based on revenue mix for the quarter. In Q3, our revenue had a higher concentration of sales to Pioneer, which carries a higher margin profile business than our legacy business. And in Q4, a greater percentage of our sales came from our legacy business as opposed to the new channels to Pioneer. So, it’s really just a revenue mix situation, not any sort of reduction in our ability to generate stronger margins. Brett Wong Okay. So nothing industry‐related, just mix? Matthew Szot Exactly. Brett Wong Great. And then, in looking at the margin for next year, and you talking about keeping it in this low 20% range, with the lower Australian production than you guys expected, you said you’d be sourcing other low‐cost seed in order to make this blending initiative continue as you’ve done this year, do you need to increase the volumes of that blend? Obviously it would depend on where you’re getting that low‐cost seed from. But given the extreme low‐cost seed of Australian seed, do you expect that you’ll have to buy increased volumes in order to keep the margin in that low 20%? Mark Grewal Let’s see how we can start this out, Brett. First of all, the public‐type varieties, in general, have actually increased quite a bit in where they are available to purchase. So, there’s a higher price on the lower end. The high‐end proprietaries basically stayed around the same, but what we’re cautiously optimistic about is normally in this business, as the low‐end pushes up, in time it ramps up the proprietary types above that, but that’s why we’re just being very cautiously optimistic on where we think the high‐end of our proprietary. And, of course, what Matt mentioned to you on the mixes in any one quarter, and what we have to do to make sure our customers have the product they need, is those blends and the optimization may have to change in the certain markets and there could be a higher component of Australian seed or there could be a higher component of actual seed we had to purchase in the open market to make sure our customers are taken care of. And that’s where it’s very hard to just sit there and tell you well this one is 25% and this one is 30%. It depends on what’s available at the time and how we can fill that market with our genetics and with our plant breeders and our marketing guys making sure that that customer still has a high‐end, high quality product that will give him the protein that he’s after for feeding their animals. Brett Wong Okay. So, I guess, in order to hit that low 20% margin range, do you need to see additional price appreciation on either the low end or for your proprietary seed?

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Matthew Szot No, I don’t think so, Brett. And I think as what Mark was touching on is hopefully the dynamics play out on like they have historically done where we see this increase in ASPs on the lower price point products which we are experiencing right now. Hopefully that will translate to higher ASPs across the board, particularly in our leaf varieties, and that dynamic plays out, like we hope it does, that would certainly all be an upside to the numbers that we’ve guided to here. But, as Mark said, we really just sort of want to err on the side of caution until it actually materializes. Brett Wong Okay. That makes good sense. Thanks. And then just looking at the guidance, the revenue guidance, if you back out the expectation of the Pioneer contract distribution agreement, your expectations are to have very modest growth in the legacy business. Is that, again, just on the side of caution or can you talk a little bit more in terms of what you’re expecting there? Mark Grewal Do you want to start? Matthew Szot Well, Brett, I think it’s two things. Yes, I think we’re erring on the side of caution because as we tried to flag there is going to be a certain limitation to the amount of optimization we can do because of the lighter Australian harvest. And I think that’s really the main driver for why we want to just be cautious here. There are certainly several different scenarios that can play out that will enable us to beat these numbers and, certainly, that’s what we’re going to be attempting to do. But until these variables play out over the coming months, we just, again, wanted to err where we think is the baseline number. Brett Wong Okay. And then as we look at that legacy business, too, and obviously things improved this year in terms of seed demand and global inventories reducing, do you continue to see that and do you continue to see major customers like in Saudi Arabia coming to the market next year and that shouldn’t be any issues? Mark Grewal Okay, Brett, we have a very strong opportunity going forward to really ramp up the non‐dormant side because of the Pioneer germplasm and what we can do, again, a new type of optimization program in the private label with distributors. But, to do that it’s slow and we’re being cautious because we are increasing acreage for production. And so, we’re out contracting more, hopefully another 3,000 to 5,000 acres plus. But, as we ramp up that acreage then we’ll be able to supply more, which will equate to more revenue. Brett Wong Okay. Very good. Thanks a lot for the time, guys, I appreciate it. Mark Grewal Thank you very much.

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Matthew Szot Thanks, Brett. Operator Once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star and two. Our next question comes from Chip Richardson from Wedbush Securities. Please go ahead with your question. Mark Grewal Chip, go ahead. Operator Mr. Richardson, is it possible your phone is on mute? Chip Richardson Sorry about that. Congratulations on the good year and quarter. My question has to do with Bioceres and Calyxt. There’s been some issues about GMO seeds. Do these two agreements help with that and how are things going in terms of problems worldwide with GMO products for alfalfa? Mark Grewal Well, Chip, the Bioceres allows us to get into other parts of the world that don’t have the high cost of the United States regulations into the bio‐tech world, and the reason that one is so intriguing to us is we have a collaboration agreement, actually, as a seed company and we’re selling a lot of seed down there. And, so then it dovetails into the research that they’re going to do with our high‐end genetics in that area and they don’t spend the money on the same type of a‐biotic or stress‐type of system. They’re looking at through the technology that you would have to go through in the regulatory process in the United States. So, we wanted to go to somewhere we might be able to get in and actually be able to go to places that normally would take longer to get to because of that regulation. On the Calyxt side, that’s really something exciting because it’s going to allow the ability to possibly have non‐GMO labeling on normalized GMO traits at a very low cost and actually allow the sale of high value traits for margins in areas that don’t allow GMO. Chip Richardson Excellent. Thank you very much. Mark Grewal Thank you very much. Operator And, everyone, at this time, it’s showing no additional questions. I’d like to turn the conference call back over to management for any closing remarks.

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CONCLUSION Mark Grewal Thank you, Jaime. Again, my thanks for everyone for participating on today’s call. We look forward to talking with you again at the conclusion of the current quarter. And we hope you have a great evening. Operator Ladies and gentlemen, the conference is now concluded. We do thank you for attending today’s presentation. You may now disconnect your telephone lines.

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SANW Q4 FY2015 CC Transcript 091615 - S&W Seed Coswseedco.com/assets/SANW-Q4-FY2015-CC-Transcript-091615.pdf · 2018-05-29 · actual results may differ materially from those projected

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