S&W Seed Company (NASDAQ:SANW) Q1 2025 Earnings Call Transcript

S&W Seed Company (NASDAQ:SANW) Q1 2025 Earnings Call Transcript November 19, 2024

Operator: Good morning and welcome to the S&W Seed Company Preliminary First Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

Robert Blum: All right. Thank you very much, operator and thank you all for joining us today to discuss S&W Seed Company’s preliminary first quarter fiscal year 2025 financial results for the period ended September 30, 2024. With us on the call representing the company today is Mark Herrmann, company’s Chief Executive Officer; and Vanessa Baughman, the company’s Chief Financial Officer. At the conclusion of today’s prepared remarks, as the operator indicated, we will open the call for a question-and-answer session. [Operator Instructions] Before we begin with prepared remarks, please note that 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 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.

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. Listening are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ merely 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 September 30, 2024 and other filings subsequently made by the company with the Securities and Exchange Commission.

The preliminary results discussed on this call are based on management’s initial review of the company’s results as of and for the quarter ended September 30, 2024 and are subject to revision based on the company’s quarter end closing procedures and the contemplation and external review of the company’s quarter end financial results statements. Certain details largely pertaining to the VA process which are expected to impact financial results below the continuing operations line are not provided in today’s announcements. Actual results may differ materially from these preliminary results as a result of the completion of quarter end closing procedures, final adjustments and other developments arising between doing now and [indiscernible] results are finalized and such changes could be material.

In addition, these preliminary results are not a comprehensive statement of the company’s financial results for the quarter ended September 30, 2024 and should not be viewed as a substitute for financial statements prepared in accordance with generally accepted accounting principles and are not necessarily indicative of the company’s results for any future period. Please note that the accounting requirements for reporting the S&W Australia business going forward will be classified as a discontinued operation upon entry into VA on July 24, 2024. Accordingly, the company’s preliminary consolidated financial information for all periods presented reflect the S&W Australia business as a discontinued operation. Finally, to supplement S&W’s financial results reported in accordance with U.S. generally accepted accounting principles or GAAP, S&W will be discussing adjusted EBITDA on this call.

These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measure and are not prepared under any comprehensive set of funding rules or principles. The operator indicated an audio recording and webcast replay for today’s conference call will also be available online and on the company’s Investor Relations page. With that said, let me turn the call over to Mark Herrmann, Chief Executive Officer; for S&W Seed Company. Mark, please proceed.

Mark Herrmann: Thank you, Robert and good morning to all of you. I’m excited to be speaking with you all today to set the agenda for the call this morning. I will first touch at the high level on an update of the VA process with our Australian entity. With this process nearing completion, I will then provide an overview of the go-forward S&W which consists primarily of our U.S. based operations including our industry-leading sorghum trade portfolio with Double Team and Prussic Acid Free Sorghum Solutions, along with our VBO joint venture with Shell. Finally, Vanessa will provide a detailed review of the financials, including our fiscal ’25 guidance. We will then look to take any questions that you might have at the end of the call.

Taking a step back as most of you that have followed S&W for the past few years are aware, S&W Americas operations which includes our sorghum operations led by our Double Team traded technology solution as well as alfalfa seed primarily in the U.S. and the broader Americas have contributed solid revenue growth and increasing gross margins over the past year. For example, Double Team grew 68% last year from $6.5 million in fiscal 2023 to $10.9 million last year and contributed gross margins of approximately 70%. Conversely, our Australia-based operations have experienced ongoing challenges in the current market environment. During fiscal 2024, total Australia, domestic and Australia international revenue went from $43.6 million to $29.1 million, a decline of more than $14 million or 33%.

As recently as a few months ago, these challenges were amplified by the lack of viable strategic alternatives to Saudi Arabia’s recent discontinuation of import permits for alfalfa seed and all forages and the increased risk that S&W Australia would be unable to meet its debt obligations. On July 24, 2024, our subsidiary, S&W Australia Pty had entered a Voluntary Administration, or VA. VA is a process designed to assess the company’s financial situation in operations and explore options to provide a better return for creditors. As we mentioned in our 2024 earnings call, we expect the conclusion of the VA to occur here in November. Soon thereafter, we will provide the details of the VA resolution through a press release and 8-K. I can say this process has resulted in providing the resources needed to create a going concern for all entities.

Once VA is completed, S&W will be exclusively focused on its core U.S.-based operations which, as I mentioned a moment ago, is led by our high growth high-margin sorghum trade portfolio, led by Double Team entering its fourth year of sales with trade adoption planted on 10% of U.S. green sorghum makers in 2024. Along with planned launches in motion for DT2 and precise acid free serum solutions. As I have stated in the past, the enthusiasm of growers toward Double Team is extremely high. In 2024, we estimate Double Team was planted on approximately 10% of all sorghum makers in the United States, up from approximately 6% in 2023. As we look to next year, our expectations are that Double Team will be on 12% to 14% of grain sorghum acres. Vanessa we’ll get into the guidance in more detail but our expectation is that Double Team will be more than 1/3 of our revenue this year, as total revenue in the future continues to shift more towards a robust sorghum technology portfolio.

Including product line extensions and new technology offerings planned over the next year, we expect to see continued top line margin expansion in support of our near-term goal of profitability. With this earnings call, coming less than 3 weeks after our year-end call, without going into the same level of detail I did on that call, let me just remind everybody on the key initiatives we have in place to drive our broader sorghum technology business going forward and expand our profitability. First, we continue to build a robust commercial infrastructure to drive continued market share adoption going forward. Today, we are working with S&W Sorghum Partners brand Seed as well as over 15 independent seed companies in the U.S. market have signed on to an in-license of our sorghum traits providing grower customers the benefits of S&W sorghum traits in their seed brand.

Second, as part of our strategy to further accelerate growth, we have launched a pilot program with many of our licensees which enables them to purchase finished goods including production and then report gross sale as grower point of sales and [indiscernible] we believe this model will contribute to continued market penetration growth. Third, we have adjusted our sales and marketing efforts to ensure S&W is supporting all seed brands representing our technologies in the market. This includes focusing our organization on activities that support all seed company’s success with S&W sorghum traits with their customers to contribute to this, we have realigned the S&W sales organization’s job focus as well as job titles to S&W technology reps. Fourth, we’re making great progress with our global partners, completing chemistry trials and registrations in key global sorghum markets as well as licensing agreement with global sorghum independent seed brands.

Fifth, on the production side, we continue to make significant progress with our efforts to streamline operations and work towards best-in-class cost of goods with each element of production focused on ensuring quality and efficiency. Six, we continue expanding our focus on sorghum through the launch of DT2 and Prussic Acid Free Trait this year. As a reminder, DT2 will allow a broader application window to growers to control grassy weeds in the sorghum crop through an over-the-top application. And Prussic Acid Free sorghum designed to naturally toxic metabolites from stress sorghum for safe, worry-free grazing and hay. This will also lead way to the introduction of our first stake trait by combining Double Team and Prussic Acid Free into single seed option which continues to add value to farmer’s sorghum production acres.

High-value trait solutions will be the key driver for S&W’s long-term success as we are becoming the key technology provider in sorghum. As we look to the future, we will continue selling other forage solutions beyond sorghum in the near term. In the Americas, we had about $10 million sales in forages last year and that number will be relatively the same this year, perhaps down about $1 million or so. As a reminder, this is primarily dormant of alfalfa seed sold in the U.S. and non-dormant alfalfa seed sold in Latin America. This business would continue going forward as part of S&W. During the first quarter, we also had approximately $5 million of forage sold internationally including about $4 million through our U.S. operations into the international markets and $1 million that occurred in the 24 days prior to the entry of the VA that went through Australia.

As we look at the go-forward S&W and Australia-related sales of alfalfa will no longer be part of our consolidated sales. And it is unknown whether the sales into the international markets from the U.S. will continue given the transfer of assets into the VA. Vanessa will expand upon this as she relates our guidance. Finally, when we think about the new go-forward S&W, everything related to our biofuel joint venture with Shell remains exactly the same with us maintaining a 34% minority interest. The partnership is focused on development of camelina and other oilseed species from which oil and meal can be extracted for future processing into animal feed, biofuels and other bioproducts. This fall, VBO will be demonstrating camelina seed to farmers which carries resistance to glufosinate herbicide, an effective broad-spectrum over-the-top weed control system for camelina.

Let me turn the call over to Vanessa for a few detailed reviews of financials, including our outlook and guidance for the upcoming year. I will then provide some brief closing comments and turn it over for any questions. Vanessa?

Vanessa Baughman: Thank you, Mark. Good morning to everyone on the call today. Let me first thank everyone for their continued support of S&W, particularly as work through this VA process. As you can imagine, there have been a lot of moving parts, some of which were outside of management and the Board’s direct control. It is our expectation that with this process coming to a close in November, we will be able to resume our normal cadence of earnings calls and outlook into the prospects of the business. We are currently wrapping up the Q1 fiscal year 2025 quarterly review, where the 10-Q will be filed here shortly. With that, let’s dive right in on the revenue line for Q1 and as a reminder, Q1 has historically always been a very light quarter for S&W.

And based on the new structure, it will continue to be so. From a seasonality perspective, we expect Q3 and Q4 which end in the March and June quarters to continue to range between 65% to 70% of our total revenue. Q3 and Q4 will also be the quarters in which the greatest leverage in our business occurs to the bottom line as many of the fixed costs are absorbed across greater revenue dollars. Therefore, Q1 and Q2 will continue to be smaller as it relates to the overall year and not as reflective of an annualized and very seasonal business. That said, for the quarter, our preliminary revenue was $8.3 million compared to $10.8 million in prior year’s first quarter. This comparison only includes revenue for the ongoing S&W America and International ex U.S. businesses as revenue for the Australia domestic and international ex Australia businesses was recorded within discontinued ops for the period of July 1 through July 24, through VA.

Recall, our Australian entities entered VA on July 24, 2024 and therefore, we’re no longer under the control of management and were removed from our ongoing business results. Breaking it down further for the ongoing business. Preliminary sorghum sales were $550,000 versus $2.3 million last year. The revenue last year included some late-season sales that shift in Q1 of fiscal 2024. So the difference is simply timing. Preliminary America forage sales were $3.4 million compared to $2.4 million last year and preliminary international ex U.S. forage sales were $4.1 million compared to $5.9 million last year. This difference is primarily due to Saudi Arabia sales of $2.2 million in Q1 of fiscal 2024 that did not repeat in Q1 of fiscal 2025, due to the import restrictions on forged products imposed by their government.

Please note that we also have service revenue of an estimated $200,000 primarily tied to VBO which we’ve discussed in the past. Let’s turn now to our go-forward expectations. For fiscal 2025 which ends on June 30, 2025, we expect total revenue to be between $34.5 million and $38 million for the ongoing business. This number does include the $4.1 million of international sales recognized in Q1. As Mark mentioned, as we look forward to the go-forward S&W company, it is unknown whether the sales into international markets from the U.S. will continue given the transfer of Australian assets into the VA process. Customers may demand the germplasm tied to those transferred assets. And therefore, we would not want to make any assumptions that this international revenue will be repeatable in fiscal year 2026 and beyond.

Let’s break the guidance for the ongoing business down a bit more. We expect total sorghum revenue to be $20.5 million to $23.5 million, of which DT will be between $12 million and $14.5 million and the pilot for Prussic Acid Free sales will be approximately $200,000. The remainder will be within our conventional trade sales. International forage sales are expected to be approximately $4.9 million, of which $4.1 million was recognized in Q1. And America forage sales will be between $8.5 million and $9 million, while other sales will be approximately $500,000. On a normalized basis for just the Americas, excluding all international operations from both this year and last year, that would translate into revenue of $29.5 million to $33 million which was compared to $31 million in fiscal 2024 on a similar basis.

We expect growth in our high-margin DT, offset by slight declines in conventional sorghum and Americas forage as well as other revenue from the VBO partnership. Now turning to margin. Preliminary gross profit margin for Q1 was 16% compared to 25% in last year’s Q1. This largely is attributable to no sales in Saudi Arabia in this year’s Q1 results compared to a year ago where sales were $2.2 million in Q1. Recall that Saudi sales typically would bring anywhere from 22% to 26% margin for any given year. The better picture comes with the outlook for the fiscal year as a whole. We are expecting total gross margins for the ongoing business for fiscal 2025 to be between 33% and 36%. This would compare to a total gross margin of 26.2% from last year.

Again, there is a slight nuance here because Q1 did include some of the estimated internal revenue I mentioned earlier. If I exclude the international operations and focus solely on the Americas sorghum and forage operations, gross margins for 2025 would be 35% to 39% compared to 28% on an equivalent basis from last year. So while our revenue guidance shows a slight decrease to a slight improvement from the prior year on an equivalent non-international basis, you will see that gross margins are expected to increase by 700 to 900 basis points. We are expecting real leverage in the model going forward, driven by Double Team and the Prussic Acid Free Trait which carries margins from 70 — which carries margins of around 70% and 30%, respectively.

Now let’s transition to operating expenses. Preliminary Q1 fiscal 2025 operating expenses, inclusive of depreciation and amortization for the ongoing business in total were $5.6 million compared to $5.7 million last year. Looking at it on an annualized basis, our expectation is for total operating expenses exclusive of depreciation and amortization, stock-based comp and any onetime charge that may be included as part of VA to be about $16.5 million. Including depreciation and amortization and stock-based comp, that number will be approximately $21.1 million. We’ve made a number of significant reductions in operating expenses through last fiscal year and leading up to Q1 and we believe we have reached a very reasonable go-forward operating expense structure.

We still carry about $3 million of costs related to being a publicly traded company. But beyond that, we have made significant efforts to align our go-forward business plan with our expenses to try and drive the business towards profitability. Now turning to EBITDA. Preliminary adjusted EBITDA for Q1 was a negative $3.1 million. Compared to adjusted EBITDA of negative $1.7 million in last year’s Q1. As usual, a full reconciliation will be available in the press release once published after our quarterly review is complete. Based on the various inputs I provided, we are expecting adjusted EBITDA for the year to be between a negative $5 million on the low end to a negative $3 million on the high end. Put differently, with Q1 having already come in at an estimated negative $3.1 million, we are expecting the high end of our range to be at a breakeven for the rest of fiscal 2025 in aggregate.

This is a significant potential milestone if we can achieve our expectations. With regard to cash flow, just a couple of notes. For cash flow, we do not expect to be at a net cash positive position in FY ’25. Given the losses we’ll see from the EBITDA range, I previously mentioned for fiscal 2025. That said, we continue to explore options to reduce corporate expenses and manage working capital through the cost initiatives we launched last year, while we continue to see growth in adoption in our high-margin sorghum products. Also, we are in the process of securing our funding needs through a financing agreement that will remain in place for the next 2 years. We are supported through our CIBC financing arrangement currently through November 30 of 2024 and we’ll provide more information once the new agreement is finalized in early December.

Again, I’m happy to follow up with any of the details we went through if you should have any questions. With that, let me turn the call back over to Mark.

Mark Herrmann: Thank you, Vanessa. A couple of quick recaps before we turn it over to questions. With the past 18 months has been marked by significant pressure from our international operations. This is very soon behind us. Going forward, our business is being driven by our high-value, high-margin sorghum trait technology in well-established markets in the Americas. Our DT trait is one of the fastest growth seed traits on the market and we are following that up with DT2 and PAF in our pipeline which we have talked about in the past. We are making great progress with licensing agreements for our key ex U.S. markets to further expand our global reach which will add incremental value to S&W and its shareholders. And of course, we have a large equity stake in the Shell biofuels JV which has a large opportunity ahead of ourselves as we progress into our second year of the JV.

As Vanessa mentioned, our guidance for the year of negative $5 million to negative $3 million incorporates the fact that Q1 already had a negative $3.1 million attributed to it. So the remainder of fiscal 2025 is expected to be breakeven to just slight potential EBITDA loss. With the business dramatically more streamlined from an OpEx perspective and efficiencies in place to drive incremental gross margin improvement in both our traded products as well as other forage, I believe we are in a position to return S&W to profitability. I want to sincerely thank the shareholders for their patience throughout this process. We’re dedicated to recognize the value that we believe is adherent in the company to the first fullest extent possible. With that said, I look forward to taking your questions.

Operator?

Q&A Session

Operator: [Operator Instructions] First question comes from Ben Klieve with Lake Street.

Benjamin Klieve: First, just one question on the Australian VA process. Do you still expect that the max liability coming out of the VA process can be $10 million?

Vanessa Baughman: I can take that question. Thank you, Ben. We are currently negotiating with administrators as they represent creditors, right which would be inclusive of the NAV. As one of the largest creditors to the Australian entity. So we’ll probably conclude on VA process here this week. In terms of exposure, again, as we stated in the earnings call today, our focus throughout the entire VA process, what’s to create and going concern for all entities involved. So while certainly, contractually the parent company could be obligated to the USD 10 million guarantee that exists in the NAV facility agreement today that would certainly put a burden on the S&W Nevada entity. Therefore, we’ll have more information as it relates to the parent guarantee once the conclusion of VA occurs which, again, should be here shortly this week, we hope.

Benjamin Klieve: Okay. Very good. And then Vanessa, it sounded like your kind of ongoing capital needs are basically that you guys have kind of a secure facility here but are kind of waiting for the VA process to play out before really securing that in fall. Is that a fair characterization? And do you — so you expect to have real updates on kind of available liquidity, etcetera, shortly after the VA process is completed?

Vanessa Baughman: Yes. That would be correct then. As you can imagine, even with our current lender, we’ve been working with them on the conclusion of VA that, again, creates a going concern for S&W in Nevada and it’s Americas businesses going forward. So yes, everyone is anxiously awaiting that conclusion so that we can move forward with our agreement.

Benjamin Klieve: Okay. Yes. No, I’m sure of that. Okay. On cash flow, you guys did a really good job of pulling a little bit out of working capital last year to the tune of like $6 million or $7 million. Vanessa, what are your expectations for cash flow specific to working capital in fiscal ’25?

Vanessa Baughman: Yes. So improved to the extent that we will not have to support our international forge sales as we have done in the past. So there’s a natural decline in working capital needs with regard to the supply that we create for that alfalfa business. But — we also are expanding our growth, right, in the DT and soon-to-be Prussic Acid Free line-up of products. Therefore, in terms of working capital needs, our cost initiatives continue into perpetuity, right? We continue to strive to be best-in-class from a production standpoint for our sorghum crop. And we’re making — we continue to make inroads in that effort. So as it relates to if I had to compare year-over-year, working capital needs on a net basis will be slightly improved.

But again, our OpEx structure despite a lot of improvements, we still are laden with about $4.5 million of corporate costs. That as I mentioned in today’s call, we’re going to look for options to reduce that on a go-forward basis that obviously will help cash flow.

Benjamin Klieve: Okay. Very good. And then on the quarter itself, the prelim results kind of everything tracks, one question that I have is around the domestic forage business. Between that revenue number and then the margins — the gross margins that you’re reporting, it seems like margins in that segment specifically may have been — may have been a little weaker year-over-year. Can you comment at all on kind of the status of the American forage business and the margins embedded within the results?

Vanessa Baughman: Yes. So where we saw a slight decline in forages from a total sales perspective was primarily in price? Again, it goes back to the global supply and demand in terms of what we see, not only in the Americas but also globally. And when it comes to particularly our Latin America market, we saw a slight decline in pricing. And to be competitive and sell the volume we had intended, there was a slight margin decrease as a result of our Latin America pricing adjustments that we had to make in the market.

Benjamin Klieve: Okay. Very good. And then last one for me and then I’ll get back in queue around Double Team. So the guide looks to be exactly as you characterized on the — on historic calls. I’m wondering about your expectations for seasonality for that product this year — this fiscal year, you guys had a pretty chunky amount coming in the second quarter last year. Do you expect kind of a similar pattern in fiscal ’25? Or do you expect that to skew more towards the second half of the fiscal year?

Mark Herrmann: Yes. So I would anticipate, we’ve seen orders blitzing up here even over the last week. So I do think we’ll see things pick up a bit for second quarter and then third and fourth quarter, again, we’ll still maintain the biggest chunk of the business for DT sales.

Benjamin Klieve: Okay. Very good. Well, I appreciate it. Best of luck you’re wrapping up the VA process. I look forward to that concluding. And I appreciate you for taking my questions; I’ll get back in queue.

Vanessa Baughman: Thank you, Ben.

Operator: [Operator Instructions]

Robert Blum: Operator, this is Robert here. While we wait to see if there are additional questions come in through the traditional teleconference line. We do have some webcast questions, Mark and Vanessa, if you can look to address some of these here and I’ll try to bucketize [ph] them and a few different topics here. Mark, perhaps you could expand upon sor-makers [ph] planted last year. Maybe any sort of outlook that you’re seeing here for the upcoming year?

Mark Herrmann: Yes. So connecting with the United Sorghum Producers Association, I really believe there’ll be an increase of acres for this coming year. If you remember a year ago, there was very wet conditions in that Central West to West South geography which is predominantly a key sorghum geography which delayed planning on corn in many cases, delayed planning significantly on cotton which then moved to sorghum makers. So year ago, we had over 7 million acres of grain sorghum recorded by USPA planted in the U.S. This last year that we just completed planting, USPA is reporting right now on the early forecast that at 6.3 million acres of sorghum planted which would be a decrease of about 12.5% of sorghum makers. The United Sorghum Producers Association which are the most connected to sorghum growers and the industry are really pretty optimistic about the return of sorghum makers and the demand platform, carry-in stocks look reasonably low and all the market indicators I would say, it’d be pretty solid.

The other piece is with changing prices — commodity prices across cotton and corn. Both of those are very high input cost crops, where sorghum is a much more efficient crop as far as inputs, really both in fertilizers, nutrients, crop protection as well as seeds. So when you look at the ROI, Kansas State again came out with their return on investment as they evaluated different herbicide systems and DT sorghum sprayed with FirstAct on all the different trial pieces they looked at delivered about $1,200 more per unit purchase per bag of seed purchase than the other alternatives in the testing. So we’ll have more information on that as harvest data gets completely wrapped up as we look to our next call but it looks very positive.

Robert Blum: All right. Great. A couple of questions here on VBO to the extent that you can look to address these. First here, talking a little bit about just sort of the revenues and how things would flow through. Is there any sort of an estimate would it be fiscal ’27 or any time line in terms of when sort of meaningful revenues would be attributable to the VBO business?

Mark Herrmann: VBO is working on their longer-range plans right now. As you recall, they purchased the herbicide-resistant trait and germplasm from Yield10 just here this last late winter, early spring. So the focus moved to incorporating bat trait and ensuring they were using trials from the material that was acquired and brought in. Their trials have gone very positive in both performance from the germplasm as well as the trait performance look to be very positive. So their main focus right now is getting farmer visibility to see the efficiency of the system and the yield potential of the system as well as ramping up seed production to put themselves in place. So really, right now, it’s a bit of a gap here as the new technology is coming in which, as you get the scheme of things, the alternative was putting research together to try to develop a broad spectrum herbicide trade which most likely would take many or several years to get to — to be in place where it can be providing a broad spectrum over-the-top weed control system this quickly is a really positive step forward.

Robert Blum: Okay. Next question here again on VBO. Any sort of impacts to potential reduction in subsidies based on the new administration here?

Mark Herrmann: That’s — it’s a very interesting question and we’ll need to most likely wait to see but I do believe the focus on reducing carbon efficient systems will still continue to move forward. Key players like Delta Airlines and others have it as core strategic initiatives within their businesses; so the audience is — probably assessment of that is probably as good or better than mine. But I do believe there’s going to be continued focus on renewable fuels and carbon-reducing activities.

Robert Blum: All right. Great. Just maybe 1 or 2 others here. As it relates to your employee sort of diversification of the structure there. After the VA process is completed, how many of them are sort of local domestic here versus anyone that might be still based internationally?

Mark Herrmann: Really, there’s no impact to the U.S. business. Since they were operated as separate businesses, it’s a pretty clean separation. So I don’t see an impact to this ongoing. Now the reality is the structure for S&W seeds will be much smaller with the separation of the S&W Australian business but it’s a pretty clean break with the VA process.

Robert Blum: All right. Very good. And maybe just more of a technical question someone has here. Can you get 2 crops a year from sorghum?

Mark Herrmann: You can get a second crop if you’re using sorghum as your double crop option. So if you’re putting in an earlier harvest crop and coming back with sorghum, it is possible but it’s in the southern portions of the sorghum region. Now as it looks at the — really the business model of Camelina, it would allow farmers to put in a fall cover crop of Camelina harvest early in the spring, be able to come back with another crop in that growing year. And then get basically 3 crops out of a 2-year period with cover crop for one of those. So there are various options but there is a market for a double crop sorghum. There’s — I don’t believe any markets in the U.S. where you get a 2 crops of sorghum. As we look at South America, there potentially will be some but we’ll be working with other seed companies in South America doing trait integration into their adapted germplasm.

Robert Blum: All right. Fantastic. I am showing no further questions to the teleconference line here. So Mark, I’ll go ahead and turn it back over to you for any closing comments here.

Mark Herrmann: Thank you, Robert. Well, I want to thank everybody for joining us and really appreciate your participation in today’s call. We look forward to hopefully speaking with all of you again shortly. And thank you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.