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Operator
Good day and welcome to the S&W Seed Company Report's first quarter fiscal year 2022 financial results. 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 then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Robert Bloom. Please go ahead.
Robert Bloom
All right. Good morning, everyone, and thank you all for joining us today to discuss the financial results for S&W Seed Company for the first quarter of fiscal 2022 for the period ended September 30, 2021. With us on the call representing the company today are Mr. Mark Wong, President and Chief Executive Officer, and Matthew Zott, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. 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 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, 2021, and other filings made by the company with the Securities and Exchange Commission. With that said, let me turn the call over to Mark Wong, Chief Executive Officer for S&W Seed Company. Mark, please proceed.
Mark Wong
Thank you, Robert. And hello, everyone who's on the call today. I would like to just start out by saying commodity prices around the world in agriculture are very, very high. We have sort of record corn, soybeans, sorghum, and wheat prices. And as all of you know, because a significant piece of our business is actually on the continent of Australia where meat prices, that would be beef and sheep prices, drive kind of farmers' profitability. Those prices are also for proteins very, very high. And so around the world in our markets, we find ourselves in a situation where farmers are as we've talked about before, are now willing to pay for that incremental bushel of yield. I mean, at these kind of returns for farmers, every bushel is a bushel they make money off of. So in some markets, as we've discussed, when commodity prices are low, the farmer may manage his farm to sort of break even. But in a market like this, he's going foot on the gas to get as much yield as he can And, you know, that's reflected in high demand for seeds in general and for S&W seeds in particular. We will be seeing in the 2022 year price increases in pretty much across the board. Some species obviously are prices will increase more than others, but price increases across the board and improving margins for S&W will result from that. That being said, though, Our strong year this year is still being buffeted by some of the logistics problems that everyone's reading in the popular press. These problems are really first generated by the shutdown of worldwide economies by COVID and now with the restarting of those economies and the huge demand being placed on trucking and shipping. around the world, we are still feeling that. And I would say versus 12 months ago, I think it's not getting better. It's actually getting a bit worse. But, you know, we've also changed some of the things management-wise in the company to try to deal with that. So we have organized our sales contracts so that some of the freight costs are now borne by our customers. And we're doing things like cleaning our new crop seed as rapidly as possible. So we have cleaned to date in the northern hemisphere about twice, at least twice as much, sometimes more than that seed than we had cleaned at this time last year. And what helps us in the northern hemisphere is that we had a very good production season. This year, we did not get any early frost and we did not get any rain on the crop. So all of that crop has been harvested in the Northern Hemisphere, U.S. production locations, and is in our two plants in Idaho and Texas, now being cleaned. So because shipments are still troubling in terms of getting trucking companies and the and shipping lines to hold to a schedule. I thought it might be useful just to remind everybody kind of where the problems for S&W are coming from. So if I can dive into a little bit more detail, and this kind of reflects what I said on the last call when we had a chance, Matt and I, to speak to all of you. So in the U.S., you know, it's a northern hemisphere cycle. We harvest in September and October, and we sell in May and June. And in a normal year, we have plenty of time to clean the seed and get it ready. And that's augmented also by the fact that we carry over some inventory in different varieties and hybrids. And so we can ship to our customers both out of new crop harvest and out of carryover inventories. And in the Australian home market, so that's the continent of Australia, we have the same kind of thing, except it's a southern hemisphere production cycle and sales cycle. That's another one of our big home markets, and it's a significant piece of our sales. And we have 12, 14 salespeople in the field there selling to distributors and dealers. So, you know, the seasons are just opposite. So we are selling now into the Australian farmer customer network that we have. And, you know, we normally harvest in that sort of April and May period. And again, we sell out of carryover inventory. We have plants there that we operate ourselves and where we receive and clean the seed. And so it's a much different similar market to the U.S. and timing only a six month sort of delay. The problem that we have is because we produce a majority of our alfalfa and in this case it's the non-dormant alfalfa, the ones that are not grown in areas which have severe winter so that we don't need to provide Alfalfa varieties that can survive winter because the winters are basically very mild, so this is the Middle East. What we have is a southern hemisphere production system because we're harvesting and growing those crops, mainly in alfalfa in this example. In Australia, so we're harvesting in kind of April, May and but we've got a northern hemisphere, even though it's closer to the equator. a northern hemisphere planting season. So these guys want to plant July-ish, August, July, sometimes June. And so we always are pressed to get the new crop cleaned in Australia and send it to our customers in the Middle East. And a lot of times we send the first shipments out of carryover inventory and then the later shipments in the season when we have another 30 or 60 days, we send out a new crop. And that will continue, but COVID and logistics issues have made those shipments the ones that have a timing problem in terms of whether they make it into our fourth quarter or our first quarter of the next year. And so as we have happened In the 2021 year, those shipments did not make it into the 21 fiscal year since we have an end of June fiscal year. Those shipments are in the 22 fiscal year, and Matt will talk a little bit about that in detail. So, you know, that's where our problem is, not in the US market or the Australia home markets, but in the Australia production of alfalfa that then goes from a southern hemisphere production cycle to a northern hemisphere sales cycle. And so that, I just wanted to be specific, is the reason why our guidance of 80 to 85 million is maybe a little bit lower, as we talked about in our last call, than some people expected. And that's just because we had 2,021 sales move to the first quarter of 22. And we will have fourth quarter 22 sales move to the first quarter of 23 fiscal year so that we're not double counting those sales of alfalfa to the Middle East in one fiscal year. We're not counting them twice. And the reason is that the high demand in addition to the logistics issues has almost eliminated all of our carryover inventory. And so most of the shipments will have to come out of new crop. And it's going to be very, very difficult to get that crop clean and in the environment of logistics issues, get it on a boat and get it to the Middle East in the 2022 fiscal year. So those shipments will be in the 2023 fiscal year. There's still plenty of time, even with shipping in July and August to get, and September even, to get those crop bags of seed to our customers in Saudi. We're not going to miss the planting season. It's just folding from one fiscal year to the next fiscal year for us because of the short inventory situation. And that's a good thing because that just means there's high demand from our customers and the logistics issues that we're experiencing in trucking and containers, which is a bad thing, but we're trying to manage that by cleaning our seat as early as we can, paying attention to all the logistics issues. Every time there's just even the hint from a trucking company or a shipping company that there's going to be a problem, we're sort of all over it now trying to look at alternatives. And from a cost standpoint, we've passed some of those freight costs on to our customers. So I just wanted to touch on that and just absolutely spend a little bit of time making sure everyone on the call understands why the guidance, as Matt's going to tell you, is still in that $80 to $85 million US dollar range. And with that said, I'll go on to a couple of high points. As I said, the farmers are very excited about what's happening this year. They're going to make money. So demand for our seed is really high. Our double team trait in sorghum, that's our herbicide resistance trait to control grass weeds, is looking very, very strong. As I mentioned, in the northern hemisphere, we usually set prices around December 1st. And so we're in the process of doing that. but we're hearing very strong reaction from our sales force that farmers were very, very impressed with the performance of Double Team in this past 2021 year. And we expect them to be pretty much sold out in the 22 fiscal year also. So Double Team's going really well. That's a big thing for S&W because The margins are very strong on traits, as all of you know. And we're very, very pleased with that. And it also gives our salespeople something to talk about with their customers. Hopefully it will drag along additional sales of other sorghum lines that we sell that are not double teamed. So both double teamed and non-traded hybrid sorghum lines. grain sorghums look like we're going to have a good year. We are also, as I said, following the Monsanto strategy where we, based on the strong demand, are pressing other seed companies to license the trade from us, and that continues to go well. I don't have any new news specifically to tell you right now, but there are some of the bigger players in grain sorghum now looking at the trade and in discussions with us about a license. On the stevia front, as you all know, we signed the agreement with Ingredion. We have an agreement to ship containers of leaf to China to put it through their extraction plant and their purification plant. Those plans remain on schedule. We planted a crop in North Carolina this fall. And we will plant more acres in the spring, and we expect to be able to meet those requirements for leaf, dry leaf that we are going to deliver to Ingredion in China. So that all looks fantastic so far. And again, that's just the beginning of a longer-term relationship where eventually we hope that we will, we being Ingredion and SW, will embark to really build the U.S. market, which is supply market, which is the biggest demand market for Stevia, and that there will be a new production plant built in the U.S. to both extract and purify stevia from dry leaf, and that, as our agreement with Ingredion indicates, that we will be the supplier of that leaf to Ingredion over the next decade. We've touched a little bit on margins, but I'll just say we're in the process of setting prices. As I mentioned, in the U.S., we sort of do that in December, early December. We have set prices in Australia as we're selling into that Australian market and margins look good. Matt's going to give you some indications of that. And as the new prices hit in our big quarters, which is the third and fourth quarter, we expect margins to actually improve some more over what they currently are. Lastly, I'd just like to say, you know, it did the attract some interest in the shares, I think, when shareholders, both current and potential, saw that management and the board stepped in to raise, through a private placement, $5 million of equity. And we're pretty simple guys, so we just sell common. It wasn't any kind of high-powered special equity It's the same kind of shares that we've always sold. And I am personally happy to say that I was also an investor in that round of 5 million. And I just think that all the work that we have done as a management team is starting to really show in the form of better margins and our work in alpha Alfalfa in the Middle East with the markets coming back, our deal with the stevia with ingredient and more. The most important thing in the short term is our double team trait, which is going to add to significantly to the financial returns in 2022. So with that, I'll turn the presentation over to Matt and then I'll conclude with a couple of comments. Matt, please.
Robert
Thanks, Mark, and thanks to everyone joining us on the call this morning. Core revenue, which excludes revenue to Pioneer, was $15.5 million for the first quarter, an increase of 27% compared to $12.2 million in the first quarter of the prior year. The increase in core revenue for the first quarter came primarily from the MENA and Australia regions. Now, I want to clarify that core revenue and total revenue will be the same number in fiscal 22. but we still referenced core revenue as long as we were comparing against fiscal 21 numbers. As a point of reference, our prior year Q1 results included revenue from Pioneer of approximately $1.6 million. Now, as we discussed during our last call, the supply chain and logistical challenges resulted in approximately $5 million of sales orders that were originally expected to ship in Q4 of fiscal 21 to shift into the first quarter of fiscal 22. The limited availability of overseas containers that Mark talked about and just the ongoing congestion at the ports continues to delay shipments and really complicates our ability to precisely forecast the timing of shipments in any particular quarter. At this point, we're expecting these dynamics to persist throughout the year. So as we look to our annual fiscal 22 guidance, we are reiterating that core revenue and total revenue will be within a range of 80 to 85 million. This estimate represents core revenue growth of approximately 15 to 20% year over year. Now, as Mark mentioned during our fiscal 21 year end call in September, it's important for everyone to remember that despite the shift in revenue from 21 to 22, we are expecting a similar shift of revenue from 22 into 23. And as mentioned, we expect shipping challenges to continue, which will likely impact the timing of our Middle East sales orders, which typically get shipped in that June time period. So as Mark discussed earlier, we also see additional risk of being able to process and ship the upcoming Australian harvest, which is coming out of the ground roughly in the April timeframe. And therefore, the timeline to harvest the seed, clean, package it, and ship it is going to be likely more difficult this year than in the past. This is further impacted by the fact that this year we're going into the sale season with lower levels of carryover crops. Now turning to gross margins, GAAP gross margins were 20.1% compared to 12.9% in the prior year. Adjusted gross margins, which excludes the impact of inventory write downs, were 22.1% in the first quarter compared to adjusted gross margins of 19.4% in the first quarter of the prior year. Now, despite the overall rising costs for shipping and transportation, we delivered higher gross margins in our alfalfa and pasture product lines this quarter. And as we previously mentioned, we are expecting gross margins in fiscal 22 to show solid improvement over 21. This improvement is expected to come from the various initiatives we've put in place, including the implementation of price increases, passing along the incremental cost of freight and transportation, as well as focusing on several other operational efficiencies. We believe that the Q1 results reflect the early innings validation of the various initiatives that we're putting in place. Now, quickly turning to operating expenses, Our gap operating expenses for the first quarter of 22 were $8.9 million compared to $8.1 million in the first quarter of the prior year. During our call in September, we provided full-year operating expense guidance, and I'll provide that recap again. So we project full-year fiscal 22 operating expenses as follows. SG&A to be approximately $25.5 million, which includes non-cash stock-based compensation of approximately $2 million. R&D to be approximately $8 million, and depreciation and amortization to be approximately $6 million. So, as you can see, our Q1 actual operating expenses were lower than the Q1 pro-rata portion of our annual diamonds. We're focused on holding and reducing operating expenses wherever possible and, of course, growing revenue in the margin line items. Now, at the EBITDA line, we had negative EBITDA of $4 million for the current year. I'm sorry, for the current quarter, I should say. compared to negative EBITDA of $4.6 million in the prior year. If we exclude the pioneer contribution from last year's EBITDA, the year-over-year improvement to EBITDA is actually $1 million. Please keep in mind that our Q1 and Q2 quarters are typically our slowest quarters, so we expect to see a meaningful improvement in EBITDA as we move into the second half of the fiscal year. Now, as we mentioned in the year-end call in September, given the impact of revenues and gross margins primarily from the logistical challenges in fiscal 21, we fell short of our adjusted EBITDA and cash flow targets in 21. And as a result, we worked with our lenders and we entered into amendments and waivers with them to address the noncompliance with certain financial covenants as of June 30, 2021. I'll point out that we're in the final process of renewing our facility with our bank in Australia, and this new agreement will not only expand the size of our credit facility, but also extend the maturity date to September of 23. And lastly, as Mark mentioned, and as many of you have seen in our recent disclosures, but we did complete a $5 million equity raise in October, led by our board and management. So we're certainly pleased with the insider participation as we continue to work on improving the strength of our balance sheet. So with that, I'm going to turn the call back over to Mark.
Mark Wong
Thanks very much, Matt. I'd just like to remind people in my final comments here, you know, the ag markets are very, very strong. And S&W, we expect, is going to have also a very strong year in 2022. We're working hard to get the company to maximize our sales and profits and margins. in the third and fourth quarter, which, as Matt said, are our big quarters. And we expect seed volumes to be up and also prices to be up. And as I said, we expect to be sold out of some of our hybrids and varieties and various species. So with that, I will turn the call back over to the operator. And Matt and I would be happy to take some questions. Thanks very much.
Operator
We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Sarkis Sherbetian with B. Reilly Securities. Please go ahead.
Sarkis Sherbetian
Good morning, Mark and Matt. Thank you for taking my question here. I just wanted to start on the margins front. Clearly, the margin improvement should be tied to the sales line, and typically in the fiscal year, the back half of your fiscal year is where the sales come. So I guess, can you help me understand the cadence of the margin build, especially as you posted a 20% plus adjusted gross margin here in 1Q? How do we expect that to evolve as the year progresses?
Robert
Yeah. Mark, did you want me to take this?
Mark Wong
Yeah, yeah, please.
Robert
So Sarkis, uh, you know, as we've talked about before, from a revenue perspective, keep in mind that about roughly 70% of our revenues are on the back half of the year. The first half of the year, particularly Q1 and Q2 are primarily dominate or concentrated with non-dormant alfalfa sales orders, which you know, um, are typically a lower margin crop. Now we are seeing pricing improvements. in non-dormant alfalfa, particularly in the MENA region. That contributed to the gross margin improvement in Q1. Probably a similar gross margin profile for Q2 because, again, it's primarily going to be concentrated in alfalfa. And then certainly as we move into the back half of the year when we start selling more of our higher margin products, particularly our double-team sorghums and our other hybrid sorghums, the margin profile really ramps up. So as we look to the full year, we're looking at roughly 25% margins. Can I answer your question, Sarkees?
Sarkis Sherbetian
Yeah, absolutely. Very helpful there. And then as far as just kind of the outlook on the ag markets, I think, Mark, you're calling out the record prices for some of the other grains and then also the meat prices driving farmer profitability, especially in your Australia market. I guess As you kind of look out and look at the other grains, are you seeing some of your crop lines become more competitive in the farmer's eyes, and how do you see those discussions playing out as your sales force goes out to sell product?
Mark Wong
Yeah. You know, I think a rising tide is lifting all boats, as I say, and the high grain prices and farmer profits – you know, are really changing kind of the psyche of farmers. So for a few years now, we've had low prices and farmers have been in survival sort of mode and governments have been paying big subsidies. So this is really a fairly new thing in this cycle. It's the beginning of an up cycle, how long it's going to last and stuff. It's not really known to our case, but I think it's a great time to be buying ag stocks. And, you know, obviously, we all benefit from, uh, the farmer's ability to, to make money. Um, I think our crops in particular, you know, we try to focus on things that we can bring technology to like our double team, uh, sorghum, which is, you know, as I said, uh, looking very, very, um, high in demand and, and, uh, And we also try to manage our portfolio with longer term issues like water use and things like that in mind. We think it's very important for the long term to basically always understand how much value is created for every unit of water. And so we do that analysis kind of on the crops that we decide to go into. And, uh, so, you know, I think, um, for us, uh, you know, trying to, uh, focus the company on these high demand kind of things, carbon, you know, obviously it's important. So we're looking at how we might participate in those markets, um, more clearly, you know, basically how do you make more, um, things in a plant. So that's another, uh, target that we're doing some work on. So, you know, I don't think there's going to be obviously cement made in plants or steel made in plants, but other things obviously are made in plants today, like the basic materials for some of the fuels. And so, you know, we're looking at all of those kinds of opportunities also. I mean, the world's a changing place and for small companies like us with really experienced management who are getting uh, a little, uh, for myself, at least old in the tooth. Um, but you have the experience to look at the markets and remember what happened over the last 40 years. Uh, it's just, uh, you know, it's, it's just fantastic to get up in the morning, uh, come into the office, talk to our people. Um, for me, it's, uh, just, you know, the culmination of, uh, of a, of a lifetime's worth of work. And now the markets are giving us opportunities and, uh, And by gosh, we're going to take some of them. So we're very optimistic.
Sarkis Sherbetian
Great. Thank you. That's all for me. I'll hop back in.
Operator
The next question will come from Ben Clevey with Lake Street Capital Markets. Please go ahead.
Ben Clevey
All right. Thanks for taking my questions. Just a couple kind of high-level ones for me. One, Mark, you've talked a lot about kind of how robust the, you know, the ag economy is now and farmers, you know, kind of making planting decisions, you know, differently now that commodity prices are up so nicely. Wondering if you can talk a bit about how you see farmers considering the tradeoff between corn and sorghum, you know, particularly given, you know, how high nitrogen prices are. Are you guys seeing... that your sorghum varieties are able to take acreage in an increasing manner from corn, given the underlying price dynamics in the market right now, or am I overthinking it?
Mark Wong
No, you're not overthinking it, Ben, and you're showing your insight to the market, I think, which is something we always appreciate when we talk to you. The whole sort of balance between corn and sorghum I hope it's going to be changing, but this is only the first year really in what is hopefully going to be a cycle. I mean, in the, uh, in the nineties, I think there were in grain sorghum, at least that's what let's focus on that. And that's the most valuable sorghum family. Uh, there's also forage sorghums, but of grain sorghums, um, you know, there, there was almost, uh, Robert Hechtman, Jr.: : 20 million acres of grain sorghum in the US at one point now it's down to you know sort of six to 8 million. Robert Hechtman, Jr.: : And I think some of that's going to come back, you know that's why the double team trait is so popular because it gives farmers, the ability to substitute. Robert Hechtman, Jr.: : sorghum for corn on on sort of the same acre and, as you say, with corn has much higher input costs and much higher water costs and so. I think the farmer's making a portfolio decision, and I think we're going to see a return of sorghum acres at some of the expense of other crops. Some of it will be corn acres, some of it will be soybean acres, some of it will be wheat acres, because remember, sorghum's in sort of the western part of the corn belt where it's drier, so that's the Mississippi River to the Rocky Mountains. But I think we believe there's going to be a trend, and we believe our ability to control weeds, which has been the problem and has eliminated acres historically versus corn as a crop choice for the farmers. We think that that's changing, and we're hoping that that's going to come back. I'll send you some information on our advertising and stuff, but that's kind of the theme of our Um, advertising is sorghum is back as kind of a theme of our, uh, this year sales program in the field.
Ben Clevey
So thanks. Got it. Got it. No, that's interesting. Um, perfect. My, my other question, uh, regarding Stevia, I believe I heard you say that you plan to be kind of initial pilot plots in North Carolina in the fall, and you're expecting more to come in spring. First of all, did I hear that correctly? You did. Okay. And then, you know, I understand this is kind of a long process, but I'm curious if you can kind of elaborate on your expectations around communicating the results from those plots. Is this something that you think maybe, you know, by the spring we'll get kind of information on a, you know, yield on a per acre basis from the plots that were, you know, just planted, or is this going to be a longer term thing that we need to just sit tight on?
Mark Wong
Well, we should have some preliminary information, I would think, by kind of the end of the fiscal year, the 22 fiscal year. But remember, we've got to harvest the crops. The stuff still has to grow. We don't make stevia or any of our other crops, you know, in a production plant. It's in the ground and, you know, Mother Nature's doing all the work. And so we've got to harvest that crop. And remember, we do harvest these crops three seasons, sometimes six times, two times per season. But we've got to take the leaf, dry it, send it to China, get through all of the issues of transportation, and then get the data back in terms of extraction and then purification and look at the yields per ton of dry leaf. of the different stevianoids that, you know, that we're interested in producing. So, you know, we'll have maybe some preliminary information by the end of this year. But remember, it is sort of the way we farm it, a three-year crop, and the first year's information will be important. But, you know, we'll also be following up on the future years from the same acres. My hope is that the U.S. market is the biggest market right now. It's maybe $600 million of stevia ingredient sales, and it's going to food companies, beverage companies, baking companies, a pretty wide sector of companies that want to make use of stevia since it's not a sugar that causes diabetes. So, you know, we're still optimistic that at some point, especially with COVID and all of these issues of transportation, both just getting it there and then the cost of getting it there, right? In some cases, the container is costing us four or five times what it cost us last year to get it across the country, et cetera. So what I'm saying is there's more and more cost savings in having the production as close to the market as it possibly can be. And I think that the winds at our back and that production coming from China cannot last forever, especially pushing up against these high transportation costs. And I think that there will be a source of purification and extraction in the U.S. for stevia leaf, and that's going to come sooner than later. And that will be a good thing for Ingrediana for us.
Ben Clevey
Gotcha. Understood. Well, looking forward to that whenever we're able to get that information, and good luck going forward with that. That's probably a good place for me to leave it. Thanks for taking my questions. I'll get back in queue. Yep. You're welcome.
Operator
The next question will come from Tom Herenberg with CARM Hennig Incorporated. Please go ahead.
Tom Herenberg
Yeah, thanks, fellas, for taking my question here. The carryover from the fourth quarter into the first quarter, was there any carryover from the first quarter into the second quarter?
Mark Wong
Well, Matt, maybe you should probably answer that.
Robert
Yeah, so good morning, Tom. So to answer your question, yeah, the carryover from Q4 all was shipped out in Q1, but certainly with these ongoing logistical challenges that we've been talking about quite extensively, Absolutely. Orders that typically would have been shipped in Q1 got pushed to Q2 and we'll likely see that sort of dynamic play out for the remainder of the year.
Tom Herenberg
Can you give us an indication as to the approximate size?
Robert
You know, Tom, it's really a moving target. I think what's most important is we manage our business on an annual basis. What we're most concerned about is making sure we get products to our customers in time for the planting season. Fortunately, at this point in time, we're not losing any sales. So while things are moving from quarter to quarter, we are not missing the planting window for our customers, which is the most important thing that we're most focused on. Okay.
Tom Herenberg
And can you give us an idea of what kind of yield you had on the sorghum here in North America this year?
Mark Wong
No, we can't, Tom. That's a company secret. We don't want people to know how many... How many bags of seed we've got. I'm telling you, we're going to be sold out of some things, and we're going to get our price for that because we took the risk on inventory. Absolutely. I'm being a bit facetious, but yields were good. The crop season was excellent this year. The bad things that can happen to you as you get closer to uh to harvest you can get a frost or it can rain one of those two on your crop before you get it in the in the warehouse and get it under a roof and protection right none of those things happened uh i think this was one of the best crop seasons for sorghum and it's all in the barn now it's all out of the field and uh and we're cleaning seed like um like mad men
Tom Herenberg
Excellent. Well, appreciate the chance to ask the questions and we'll look forward to you turning, turning that into, into profits. Thanks much.
Mark Wong
Thank you. Thanks very much.
Operator
Again, if you have a question, please press star, then one. Our next question will come from Jonathan fight with KMF investments. Please go ahead. Hey, good morning, Mark. Good morning, Matt.
Jonathan
Thanks for taking my call.
Mark Wong
Morning, Jonathan.
Jonathan
Just, Just two quick questions. Wanted to understand if the October capital raise, from your perspective, kind of bridges you to the back half of the year as gross margins and EBITDA grow, or if you think another capital raise may be required sometime over the fiscal year as we continue to have negative EBITDA?
Mark Wong
Yeah, great question. Look, I'm a small company guy that has built companies starting with venture capital, right? And so I push the balance sheet pretty hard. You know, I just believe that the return that we generate from eventually the final returns that we generate from invested capital in S&W are going to be good. And I want to maximize those returns. And so I really keep a pretty short string on surplus cash. I mean, there isn't any ever. You know, that's always a that's a good CFO. And, you know, that's always an issue in the sense of, you know, he and I sometimes differ on how much liquidity we really need. But, you know, we push it hard. And I think that we have several different scenarios of things that we portfolio sort of decisions about where our focus is in the company that we're sort of working on that we haven't announced yet. And, you know, obviously we raised enough money that we believe in the intermediate term that that will carry us through. We don't think for this fiscal year that we'll be raising any significant amounts of money. There might be a small amount raised for if our growth is higher or something like that, but there's not going to be a big raise, no.
Jonathan
Okay. I appreciate that commentary. As we look over the next couple of years, especially as we kind of get into year two, year three of the Ingredion deal and assuming things go well there and there is this opportunity to build a new production facility, does any of the CapEx associated with that type of build-out fall on S&W's shoulders? Or is that we're really providing the trade technology and that physical infrastructure build-out is really where our partners would be deploying their capital.
Mark Wong
Yeah, I mean, look, we have a proprietary position based on the genetics of our varieties in stevia that's unassailable. There are no other companies that have stevia breeding programs like ours or have had them as long as ours. So that's why we... did a deal with Ingredia and we see a benefit and obviously working with them, they have a long reach towards the final customers in the food industry. It would be normal for them to build the production facility, but, you know, we're in discussions with them all the time about, you know, how much capital will it take? And, you know, we've, depending on, you know, sort of our projected returns and what those might look like for investing in a facility like that in the U.S. We've told them that we'd like to at least be part of the discussion about how the capital is raised, and we haven't made any final decisions, but we wanted to keep that window open. But for us, it's based on returns because we in Ingredion are locked at the hip. I mean, there's no place else for us to sell to someone as big as Ingredion. And for Ingredion, there's nowhere else to get stevia leaf at the cost that we can produce it in the U.S. No one else can duplicate that.
Jonathan
Interesting. Okay. Well, we'll look forward to more updates along those lines. I appreciate your time, guys.
Mark Wong
Sure thing.
Operator
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.
Mark Wong
So thank you, everyone, for being on the call today. It is exciting times at S&W and in ag in general. These are the kind of years that we work this hard to be part of, and it's much easier selling to a farmer customer who's got a smile on his face because he's making money. And so look for good results from us this year, and thank you for your interest in S&W. Bye-bye now.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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