Written by The Business Journal Staff
For the second quarter of fiscal year 2016, revenue at S&W Seed Co. increased 75 percent, to $24.1 million versus $13.8 million in the comparable period of the prior year. The increase in second quarter revenue was primarily attributable to sales under the Fresno-based company’s distribution and production agreements with DuPont Pioneer, which were ahead of seasonal shipping expectations as the company was able to process and ship seed earlier than anticipated.
S&W Seed’s gross profit margins during the second quarter of fiscal 2016 were 16.7 percent, compared to gross profit margins of 14.2 percent in the second quarter of fiscal 2015, and adjusted gross profit margins of 16.2 percent in the second quarter of last year.
Gross profit margins increased during the second quarter of fiscal 2016 primarily due to sales of the company’s dormant seed varieties to DuPont Pioneer, which were not included in the comparable period of the prior year.
The company also said it continues to expect to generate annual revenue of approximately $95 million for the fiscal year ending June 30, 2016, reflecting an increase of approximately 17 percent over fiscal 2015.
Mark Grewal, president and chief executive officer of S&W Seed, said, “We are pleased with the results of the second quarter, as alfalfa seed markets continue to be characterized by improved demand and decreased supply on a global basis. The acquisition of our dormant alfalfa seed operations continues to be a tremendous strategic driver for S&W.”
Matthew Szot, chief financial officer of S&W Seed, added, “During the second quarter, we successfully processed and shipped product ahead of schedule to our largest customer, DuPont Pioneer. While demand remains strong, our gross profit margins continue to be impacted during the current year as the weaker than anticipated seed yields have increased our seed production costs. As we move to fiscal 2017 and beyond, we have terminated production contracts where we carry farming and yield risk, which should result in expanded margins going forward.”
“Fiscal 2016 is on target to finish with record revenue of approximately $95 million as we see continued strength in our end markets,” Grewal said. “With strong progress being made within our distribution and production platforms this year, we continue to make investments to maintain a leadership position into the future. Overall, we have made tremendous strides over the last year to position S&W as one of the leading alfalfa seed companies in the world, and look forward to continued progress into the future.”