S&W Seed Co. is expecting its proprietary seeds to make up more than 10% of U.S. sorghum acres next year driven by stronger sales and demand for weed-killing solutions.
Currently, S&W Seed’s Double Team sorghum accounts for 6% of U.S. acreage after being fully introduced to markets last calendar year, the company said in an earnings release Wednesday. The product increased the company's overall revenue by 3% and generated sales of $6.5 million in fiscal 2023.
“This is a tremendous achievement and highlights the value and demand for innovation in this critical crop,” S&W Seed CEO Mark Hermann said in his first earnings call with the company. Despite improved annual sales and profits, fourth quarter results missed analyst expectations.
Sorghum has not been as popular among farmers in recent years, with planted acres declining compared to other cash crops such as corn, soybeans and cotton. Hermann attributed the decline to a lack of innovation in sorghum, making the crop more risky to grow despite its resiliency to higher temperatures.
“Other crops offered options for weed control that ultimately led farmers to those crops,” Herman said. “This has been a contributing factor to the historical declines in U.S. sorghum acres from around 10 million acres to around 6.5 million acres currently.”
S&W Seed's Double Team is a crop protection product comprising two parts: the treated sorghum seeds and First Act herbicide from Adama. Used together, the products can attack common grass weeds that affect farmer yields and profits.
After bringing its proprietary Double Team grain sorghum to the market, S&W Seed has generated millions in revenue from the product and it has plans to introduce more treatment variations next year, capturing more adoption from farmers and acreage share.
“We believe trait-related R&D is so important, and the investments S&W has made over the years are beginning to pay off,” Hermann told investors.
S&W Seed is expecting to bring a Double Team forage sorghum treatment to market next year and begin tests on a sorghum solution that is non-toxic to animals.
In addition to crop protection products, S&W Seed is working in the biofuel space. Earlier this year, the company entered a partnership with Shell to develop plant genetics for oilseed cover crops as feedstocks for biofuel production.
S&W Seed’s board of directors is also evaluating ways to unlock value in the company’s international operations. Hermann joined as CEO in July, replacing Mark Wong, who remains on the board.
Fiscal 2023 revenue totaled $73.5 million, a 3% increase driven by Double Team sales. Net income was $14.4 million compared to a net loss last year as gross profit margins doubled to 19.8%.
Fourth quarter revenue climbed 15% to $23 million over last year. S&W Seed posted a net loss of $7.2 million for the three months ending June 30, an improvement from the same quarter a year ago.
Despite the loss, S&W Seed shares increased following Wednesday’s report. They climbed about 10% to 88 cents on the Nasdaq stock exchange.