S&W Seed Company (NASDAQ:SANW) Q4 2024 Earnings Call Transcript

S&W Seed Company (NASDAQ:SANW) Q4 2024 Earnings Call Transcript November 2, 2024

Operator: Good day, and welcome to the S&W Seed Fourth Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s 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, and thank you all for joining us today to discuss S&W Seed Company’s fourth quarter and fiscal year 2024 financial results for the period ended June 30, 2024. With us on the call representing the company today are Mark Herrmann, the company’s Chief Executive Officer; and Vanessa Baughman, the company’s Chief Financial Officer. At the conclusion of today’s prepared remarks, we’ll 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 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.

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 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 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, 2023, and other filings subsequently made by the company with the Securities and Exchange Commission.

In addition, 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 accounting rules or principles. A description of adjusted EBITDA and reconciliations of historical adjusted EBITDA to net loss are included at the end of S&W’s earnings release issued earlier today, which has been posted on the Investor Relations page of S&W’s website. An audio recording and webcast replay for today’s conference call will also be made online 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?

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 this morning’s call, I will provide a high-level overview of the progress that we have made during the past year, including the commercialization of Double Team, where I will also provide an update of our commercialization plans for the upcoming year as well as a review of the Sorghum market as a whole. I will then touch on the progress being made in our VBO joint venture and some of the activities taking place there. I will, of course, discuss the voluntary administration process taking place in Australia. As I assume most of you saw, the process is expected to conclude in the fourth quarter of calendar 2024, Vanessa will then run us through the historical financial results, including the enhanced segment reporting which was a component of the delay in the 10-K filing process.

We will then look to take any questions that you might have at the end of the call. First, let’s take a look back at this past year where I think it’s important to note the general strength of our Americas business. Double Team revenue came in at $10.9 million, an increase of 68% compared to previous year. Americas Sorghum related revenue, which includes Double Team as well as our conventional hybrids, came in at $20.4 million. This was up 10% compared to the previous year. On the Americas forage operations, we came in at $9.9 million, which was above the $9 million expectation we provided at the beginning of the year. Company-wide gross margins of 26.2% were above our stated outlook of 24% to 26% as we maintained a keen focus on operational effectiveness.

Total operating expenses, excluding any impairments came in at $30 million. This was well below our stated guidance of $32.5 million. On the flip side, our international operations continue to experience challenges, which we have been discussing with all of you during the previous calls and led to our Australian subsidiary going into voluntary administration with Deloitte & Touche assigned as the administrators of the entity as of July 24, 2024. Again, I will touch more on this in a moment. Overall, Australia domestic and international sales were just $29.1 million last year, well off expectations we had at the beginning of the year of $45 million to $50 million and overall was down 33% compared to last year. Despite the impact this impact, the improvement in the Americas, coupled with operational efficiencies where possible, led to overall adjusted EBITDA improvement from previous year, given the headwinds from the international, I believe this is quite an accomplishment.

Let’s discuss the Americas in more detail. As I mentioned during this past year, Double Team experienced a rapid growth in the marketplace with revenue up 68% compared to last year. We estimate that the proprietary high-value sorghum trait technology will be planted on approximately 10% of all sorghum makers in the United States in 2024, up from approximately 6% share in 2023. While the $10.9 million revenue was just below the low end of our outlook we provided of $11.5 million, we believe this delta is almost entirely due to the change in sorghum makers planted in the U.S. this year compared to previous years and not reflective of the acceptance of the trade or the performance of our sales team. For those of you that follow the industry closely, you are well aware that the USDA came out with their Sorghum acre report on September 12, which indicated total sorghum acres planted in 2024 was 6.3 million acres.

This is down 12.5% from 7.2 million acres planted in 2023. This data makes it clear that we, in fact, met our market share objective being on more than 10% of total acres in 2024. The pullback in acres, however, did have an impact on total acre adoption and thus our revenue in 2024. While there are their disappointment in the acre numbers, our enthusiasm and more importantly, the enthusiasm of growers towards Double Team remains extremely high with expectations to be on 13% to 15% of grain sorghum acres next year as the farm value that Double Team creates is highly evident through the resulting increase in yield through controlling grasses, which drive the sorghum crop of nutrients, water, sunlight and ultimately reducing sort of yield. This rapid adoption of our high-value, high-margin solution in just three years since its initial introduction.

Remember, Double Team has gross margins of greater than 60% and has led to a strong improvement in the company-wide gross margins as total revenue in the future continues to shift more towards our robust sorghum technology portfolio, including product line expansions – extensions and new technology offerings planned over the next year, we expect to see continued topline and margin expansion in support of our near-term goal of profitability. As we look to next year, we continue to build on a robust commercial infrastructure to drive continued market share adoption going forward. S&W is being recognized as the leader in sorghum technology, providing farmers production tools that increase the value of sorghum acres. Today, we are working with over 15 independent companies in the U.S. market, which have signed on to an in-license of our sorghum traits providing their growers customers the benefits of S&W sorghum traits in their seed brands.

Each of these independent companies have strong relationships with their farmer customers. 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 units, including production and then through a grower point of sales or GPOS reporting, pay S&W a royalty on units sold. We believe this model will contribute to continued market penetration growth. With the importance of all sorghum seed brands to our trait penetration success, we have also adjusted our sales and marketing efforts to ensure S&W is supporting all seed brands representing our technology in the market, including changing the job title of our sales reps to S&W technology reps. Their training and focus is on assisting all seed brands carrying S&W sorghum trade success, which also supports the expanding S&W trade market penetration.

S&W technology reps are also focused on the largest sorghum growers in the U.S. as they are both thought leaders and trend leaders in the market. Our reps’ goal is to build a positive professional relationship supporting these large farmers success with S&W sorghum traits while working with seed brands and retailer or dealer of the grower’s choice. We are also making great progress with global partners. With our chemistry partner ADAMA, completing the chemistry trials and registrations in key global sorghum markets as well as licensing agreements with global sorghum independent seed brands that are current market leaders, which will accelerate market success and enable timely sorghum trait launches in all targeted global sorghum markets. These agreements enable S&W serving traits to optimize global market penetration while maintaining very efficient OpEx and CapEx. 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.

We’ve made great progress in the last year, we’re streamlining our inventories. At the end of 2024, 2025, S&W Americas carryout inventory will be reduced over 30% year-over-year. This will enable us to pivot our summer 2025 production to the newest highest-yielding sorghum products aggressively moving our line up to the newest high-yielding DT2 hybrids as well as further drive improvement in our cash management through reduction of cash tied up in inventory. Also increasing utilization supports reductions in obsolescence for 2025 and beyond. Our metric is to optimize the balance of total inventory, allowing aggressive sales growth while enabling the launch and production of the freshest lineup of high-value products. As we have stated in the past, our research commitment and investments are focused on creating sorghum intellectual property to increase the productivity in farm financial return including conserving water and inputs, producing a crop with enhanced nutrients and supporting food security that is uniquely equipped and adapted for tougher growing conditions.

While Double Team penetration continues to grow, we are in the process of launching the second-generation Double Team trait, DT2, which will enable a wider application window as well as expanded crop resistance to the accompanying FirstAct herbicide with a new and broadening class of high-yield hybrids providing an expanded market fit. Beyond Double Team, which gives sorghum growers an over-the-top non-GMO grassy weed control option, we are expanding our focus on sorghum through the launch of our Prussic Acid Free trait this year. Prussic-Free sorghum is designed to remove naturally toxic metabolites from stress sorghum for safe worry-fee grazing and hay. One quick point on that note is that our pilot launch of Prussic-Free forage sorghum in 2024, expanded exposure and experience leading up to this year’s full launch will further broaden the lineup.

To put some perspective to it, the farm value of Prussic-Free technology allows farmers to safely graze room and animals, cattle or sheep removing the concern of livestock feeding safety due to risk with prussic acid due to drought conditions or creating snaps in the fall. With our focus on bringing value to sorghum producing acres, we plan on introducing our first stack trait in 2028 by combining Double Team and Prussic-Free into a single seed option, which adds value for farmers. The stack trait, DT2 PF grain sorghum creates an additional farm value of $30 to $60-plus per acre. Adding Prussic-Free to DT graze sorghum will create an effective system of harvesting your grain sorghum immediately being able to put livestock on those acres to graze on a high-quality forage for 30 to 60 days.

In many farm areas, the sorghum can continue to regrow to extend that feed value on the acre until a hard freeze. Whether the farmer is grazing their own livestock or Prussic-Free creates an effective new acre grazing lease opportunity to neighboring farmers, Prussic-Free will create a new farm value for graze sorghum acres. Together, we believe the added value is tremendous opportunity for sorghum farmers, high-value Trade technology solutions will be a key driver to S&W’s long-term success as we are becoming the key technology provider in sorghum. Transitioning briefly to our joint venture with Shell focused on developing biofuels through our Vision Bioenergy partnership, an entity in which we currently retain a 34% interest – minority interest.

As most of you know, this partnership intends to develop Camelina and other oilseed species from which oil and meal can be extracted for future processing and get to animal feed, biofuels and other bioproducts. With a limited supply of [indiscernible], Camelina provides a long-term opportunity to maximize farmland for food production. On February 14, 2024, if you recall, Vision Bioenergy announced it had been granted a global license to certain proprietary varieties of Camelina from Yield10, a leader in the development of Camelina. Yield10 is supplying Vision Bioenergy certain Camelina varieties including varieties exhibiting herbicide tolerances to spray applications of the broad-spectrum herbicide glufosinate which we believe will enable Vision Bioenergy to accelerate its planned commercial activities, especially given that herbicide tolerance is critical to enable a ramp-up to the commercial production of Camelina.

In calendar year 2024, Vision Bioenergy plans to sample this herbicide tolerant system through the summer and fall with some of its key Camelina growers, while simultaneously building planting seed supply to support a potential commercial launch in calendar year 2025. While the Americas operations continue to improve and meet expectations, we have experienced challenges to our Australian domestic and international operations, which have been communicated over the past few quarters. As a reminder, in early 2023, we communicated that we were working on the possibility of a strategic transition involving our Australia international operations headquartered in Australia. Upon further evaluation to the changes within our Australian international commercial footprint, we announced that one of our subsidiaries, S&W Australia PTY had entered into voluntary administration or VA under applicable Australian law effective July 24, 2024.

This decision was made after careful consideration of S&W Australia’s financial position and ongoing challenges in the current market environment. These challenges include 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. VA is a process designed to assess the company’s financial situation and operations and explore options to provide a better return for creditors. The VA process is expected to conclude in November 2024, and we continue to work collaboratively in good faith with the administrators in Australia. We will look to share more with you as it becomes available. With that said, let me turn it over to Vanessa for a detailed review of the financials 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. Before we walk through the financials, I thought it appropriate to provide a bit of background on the delay in the filing of our fiscal year 2024 10-K. As previously announced, we are currently going through the VA process in Australia, which is expected to conclude here shortly. This process required us to provide a number of disclosures within the fiscal year 2024 10-K. And as we were working through that process, on October 17, it was determined that there was a need to report our business in three reportable segments: Americas, International and Australia domestic versus the one consolidated segment that had been reported for S&W Seed previously, which represented total seed sold globally.

That process is now complete and was reported completely in today’s 10-K filing. I believe it is also important to note that there were no errors in the consolidated financial statements for any of the past 10-Qs or today’s 10-K filing. These were simply omissions in the footnote disclosures for geographical segment reporting. With that said, as usual, we included a full breakdown of both the quarterly and annual results in today’s press release. We also provided detailed reconciliations to non-GAAP adjusted operating expenses, adjusted net losses and adjusted EBITDA. Again, both on a quarterly and annual basis. I will provide details on the key areas and events that were drivers during the year throughout our call today, but I am, of course, available to answer any additional questions you might have.

With that, let me start with revenue. For the year, total revenue was $60.4 million compared to $73.5 million last year, breaking it down further. Sorghum sales were $20.3 million versus $18.5 million last year, which is an improvement of $1.9 million. Of this, Double Team was $10.9 million versus $6.5 million just a year ago, which accounts for an increase of 68% or $4.4 million. Americas forage sales were $9.9 million for the year compared to $10.8 million last year. International forage sales were $29.1 million compared to $43.6 million last year, which is a decrease of $14.5 million. Please note that we also had service revenue of $1.1 million, primarily tied to VBO, which we’ve discussed in the past. Looking at it geographically, in the U.S., we had a $4.4 million increase in Double Team sorghum revenue.

This was offset by a $2.6 million decrease in nontraded sorghum sales in the U.S. as we transition customers to the traded platform. We also had a $1.6 million increase in dormant and non-dormant alfalfa sales in the United States which was offset primarily by a $1.5 million decrease in Mexico of non-dormant alfalfa sales. Internationally, we had a $11.4 million decrease in non-dormant alfalfa sales in the Middle East, North Africa or MENA due to the ongoing conflict in Sudan, reduced sales in to Libya and the import restrictions enacted in Saudi Arabia. We also saw a $2.8 million decrease in the Australian domestic market across all crop segments and lost sales due to inventory quality and lower pricing in the marketplace. And a $1.6 million decrease in sales to Asia of alfalfa and sunflower.

The largest component of the $1.6 million decrease was in Sunflower at $850,000 down versus last year as we were in a sold-out position on supply. These decreases were offset by a $1 million increase in grain sorghum to South Africa. Key points here are clearly the positive growth in the Americas, led by our transition of customers to our higher-margin Double Team’s sorghum hybrids, offset by the pullback internationally. I do want to point out that there was a severe and abrupt shift in the MENA markets well beyond what we had expected when we communicated with you during our May conference call. In particular, there were more than $5 million in orders set to go to Saudi Arabia that were essentially canceled due to the import restrictions enacted.

We also saw an additional $2.5 million in Libya drop in sales due to reduced market demand for Alfalfa. Now turning to margins. Gross profit margin for fiscal 2024 was 26.2% compared to 19.8% in 2023, an improvement of 640 basis points. As Mark mentioned, this was above our stated company-wide outlook for the year of 24% to 26% gross margin. The improvement was primarily driven by increased sales of higher-margin Double Team sorghum, which boosted margins by 6.3 percentage points as well as improved focus on inventory management, and reducing operational costs while increasing efficiencies in S&W’s production facilities, which boosted margins by an additional 3.9 percentage points. These gains were offset by decreased sales of low-margin sorghum Sudan forages and grasses with lower non-dormant alfalfa driving reduced margins by 3.4 percentage points and lower volumes in the Australia domestic market, providing an additional 0.4 percentage points.

So while we saw a reduction company-wide in revenue, our gross profit in dollars for the year was up by $1.3 million. Another way to look at gross profit margins in dollars is by looking at Americas versus international. The Americas, which includes sorghum and Americas forages, had gross margins in fiscal 2024 of 29% compared to 16% last year. Sorghum on its own had gross profit margins of 48% in aggregate, which, as a reminder, includes both our Double Team and conventional non-traded products. Cost of sales, excluding LCM, provided a savings of $2 million year-over-year and $2.6 million in savings, including LCM year-over-year. This is directly attributable to the cost savings initiatives and working capital management we have discussed throughout the year.

All told, gross profit dollars for the Americas was $9.2 million compared to $5 million last year. Now let’s transition to operating expenses. Operating expenses for fiscal 2024, excluding a $3.5 million impairment for Australia domestic were $30 million compared to OpEx of $32.5 million last year. Again, this was below our stated outlook of $32.5 million for OpEx in total. Breaking it down a bit, we saw a $1.2 million improvement from research and development expenses, a $700,000 improvement in selling, general and administration expenses and $0.5 million improvement in depreciation and amortization. As you will see in the press release, we incurred a $3.5 million impairment, which relates to the impairment of customer relationships and the intangible associated with customer list in Australia, that resulted from its long-lived asset impairment testing.

This amount was a non-cash charge. With the ongoing VA process, I will defer any go-forward outlook for operating expenses until that process has concluded. Again, that is expected to occur in November. EBITDA. Now as we look at adjusted EBITDA for 2024, it was a negative $8.5 million compared to adjusted EBITDA of negative $9.3 million in fiscal 2023, an improvement of $800,000. A full reconciliation is available in the press release. So despite the significant impact of lower revenue from our Australian domestic and international operations, there was an improvement in gross margin of 6.4 percentage points, an increase in gross profit dollars of $1.3 million and a decrease in operating expenses of approximately $1 million. Net of the impairment of the Australia domestic business that positively contributed to the improvement in our adjusted EBITDA.

Finally, on the net income line. GAAP net loss for fiscal 2024 was a negative $30.1 million or negative $0.70 per basic and diluted share compared to GAAP net income of a positive $14.49 million, or a positive $0.34 per basic and diluted share in last fiscal year. Please remember that we generated a $38.2 million income in last year’s third quarter due to the sale of our business interest as part of the VBO transaction. As discussed in previous calls, we will incur a loss of equity method due to our interest in VBO. In 2024, that amounted to $2.6 million. This is a non-cash expense to S&W, and we have provided a reconciliation in our press release not only for adjusted EBITDA, but for non-GAAP adjusted net losses as well. As a reminder, we received a $6 million payment from Shell in February of 2024 and a combined payment from our Trigall JV of $1.4 million in Q3 as well.

Despite our negative adjusted EBITDA this past year, which translates rather closely to our cash utilization the payment from Shell and Trigall, largely covered any operating cash needs this year. As Mark stated, with an expected outcome for the VA process in November, it is our intent to provide a detailed outlook for our go-forward operations during the release of our first quarter fiscal 2025 in mid-November 2024. I do want to point out, however, that S&W’s Australia’s and tree in QVA constitutes an event of default and automatic acceleration of S&W Australia’s obligations under its debt facilities with the National Australia Bank or NAB. However, such acceleration is stayed or paused while S&W Australia is under VA. The NAB debt facilities are guaranteed by S&W Seed up to a maximum of A$15 million or about US$10 million as of June 30, 2024.

S&W’s debt obligations under this are not subject to a stay in connection with S&W Australia VA. S&W is working collaboratively with administrators and the NAB on a resolution by November of 2024. S&W Australia’s entry into VA also constitutes an event of default under S&W’s amended and restated loan and security agreement with CIBC Bank. Because of a cross default provision in S&W’s loan agreement with CIBC that is triggered by the event of default under NAB’s debt facility. S&W has obtained a waiver from CIBC on the cross-default event on July 31, 2024, and communicate frequently with CIBC on the progress of S&W’s activity with the administrators and the NAB throughout the VA process. Again, this process is expected to be concluded in November.

We will provide information as it becomes available through our SEC filings. One final point, I do think is important to make is that from a cash conversion standpoint, we improved our ability to collect on sales outstanding by an average of 20 days year-over-year. Again, I’m happy to follow up with any of the details we went through. If you should have any additional 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 your questions. Our Americas business is, by and large, hitting nearly all the objectives we had for those operations at the beginning of the year. Our Double Team sorghum trait technology solution achieved the rapid growth and adoption we expected at the beginning of the year. Since its introduction just three years ago, it is expected to be on 10% of grain sorghum makers this year. With this growth in Double Team and improved focus on inventory management, reducing operational costs while increasing efficiencies in S&W production facilities, our gross profit dollars increased year-over-year despite the pullback internationally. If the Americas were a stand-alone operation, gross profit margins would have been 29% in fiscal 2024 up from 16% last year.

This improvement will only become more pronounced in the years to come as traded technology becomes a majority of our Americas revenue. Beyond Double Team, we continue to invest in the future of sorghum technology with DT2, Prussic-Free and stacked offerings coming in the near future. As we look to fiscal 2025, we are laser-focused on the continued growth and expansion of our Double Team operations in the Americas while working towards an outcome within our international operations. With an expected outcome for the VA process in November, it is our intent to provide a detailed outlook for our go-forward operations during the release of our first quarter fiscal 2025 in mid-November 2024. As always, I am appreciative of the continued interest and support in S&W.

With that said, I look forward to taking your questions. Operator?

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today’s first question comes from Ben Klieve with Lake Street. Please go ahead.

Benjamin Klieve: All right. Thanks for taking my questions. Australian operation. But I had to miss a minute or two in your prepared remarks, so if I’m making you repeat yourself, I apologize. But you broke down the Australian business revenue contribution. Could you break down the EBITDA loss embedded within Australia? And if so, what was that number? And if not, can you help give us some kind of general guidelines on the relative scale of losses there?

Vanessa Baughman: Yes. So again, the 10-K also includes the segment reporting that is needed for that reconciliation of EBITDA losses. And when you look at the – let me get to it here, the break down – let me follow up, give me a couple of minutes to pull up the 10-K to answer your question accurately. But it is in the 10-K.

Benjamin Klieve: Okay. And that’s fine. I haven’t seen the 10-K yet.

Vanessa Baughman: No, we haven’t filed it, we file it today. Yes. Let me open that up and if you have another question, we can address it, but let me get…

Benjamin Klieve: I will defer on that. That’s not a problem. Yes. No problem. The other question, you referred to the liability associated with that business once the VA process is completed of A$15 million, US$10 million. So at this point, does it – it feels like you’re comfortable that kind of the max liability associated with Australia once this process is done is that number? Can you really help us understand the conviction that you have regarding that as kind of the maximum liability or kind of what wiggle room there may be to that number here as the process is completed?

Vanessa Baughman: Yes. So through the VA process, again, the administrators are acting on behalf of creditors, right? And so what we understand today as part of the process, that is set to close here in November is that there is the sale pending of the Australia business. And so what the administrators do is, obviously, fulfill the outstanding amounts due to creditors within the DACA agreement. And I believe all of those terms and conditions are outlined today in the DACA agreement. And then for S&W Nevada, what we are seeking is a resolution to the guarantee, which is, as you stated, A$15 million translates to about US$10 million between S&W Nevada and NAB. And that’s what we continue to work towards for the conclusion of VA as the potential sale of the business and that work stream continues to aligned forward with our discussions with NAB. So the two are correlated and what we can say today, Ben, is that discussions are progressing to close this in November.

Benjamin Klieve: Okay. Very good. And I understand your comments about providing the 2025 guidance here on the upcoming first quarter call. But I was wondering if we can just talk a bit about kind of the high-level outlook for the Americas given that you’re not going to have the benefit of the cash flows coming in from VBO and from the wheat JV this year. If you’ve got improving operations in the Americas by itself, curious between the available liquidity you have and those improved operations and agree to what you feel comfortable with your access to capital today or if you feel like there’s a material shortfall in your American operations, given your outlook?

Vanessa Baughman: Yes. As we stated earlier, Ben, we’re not prepared to give even a range of outlook but what we do know, and as Mark talked about it – and Mark, if you want to add some comments, we will experience continued growth in our Double Team platform. We have the Prussic-Free pilot for that trade occurring as we speak for fiscal year 2025. And we continue to operate within the cost disciplines that we executed in 2024. And then there’s continued OpEx discipline and the valuation of expenses to determine, once VA is concluded. There is a shedding of certain operating expenses that are held at the corporate level that we need to evaluate. Again, the terms and conditions of VA will influence that. And so we need to work through any obligations as we transition that subsidiary to a potential new owner.

With all of that said, we’re also in discussions with a new lender so funding is not a concern for us as we lead into 2025. And then it all just continues to be a part of our working capital management and our cost disciplines that we executed in 2024. And again, then we’ll be more prepared here mid-November when we release our Q1 results and have this call to provide more specifics around the Americas business and what those growth targets are for both EBITDA as well as Double Team and Prussic-Free. Mark, do you have anything to add?

Mark Herrmann: Yes. Ben, we did communicate in this call and on the documentation that we are expecting next year, Double Team will grow to 13% to 15% share of the U.S. sorghum acres. So we fully believe the continued demand and growth and farmer-positive experience is there. And obviously, harvest is well underway in finishing. So we’ve got a great picture as far as the performance that’s going to keep driving that demand. And then we will also have continuing operational improvements, the cost of goods improvements made last year impacted just a percent of the volume that was actually sold in the last year. So that carry in inventory also is at an improved position going into this year and a larger percent of the total sales will have improved cost of goods sales impact.

And then as we look at inventories with our plan, at the end of this year, we’ll end up with a very – what I would consider an optimal inventory carryout which will also improve cash flow. So I believe the operational pieces of the business will continue to improve in the Americas business as we go into next year and then the following as well. And on the Prussic-Free, last year was the pilot so this year is a full launch of Prussic-Free so we fully anticipate the continued growth of Prussic-Free in the market as well.

Benjamin Klieve: Very good. I appreciate those the color from both of you and Mark you just addressed the last question I was going to ask. So appreciate that. Look forward to the Q1 call coming up here in a couple of weeks. And I will get back in queue.

Mark Herrmann: Hey, thank you for your questions, Ben.

Operator: Thank you. [Operator Instructions] And this concludes our question-and-answer session. I’d like to turn the conference back over to the management team for any closing remarks.

Mark Herrmann: I want to thank all of you for joining the call today. And many thanks, everyone, for participating. We look forward to hopefully speaking with all of you again shortly. Have a great day.

Operator: Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.