S&W Seed sales dropped 16% in Q2 FY 2014

S&W reported revenues of $11.5 million for the second fiscal quarter ended December 31, 2013, versus $13.7 million y-o-y. Revenues during the quarter were within the company's stated range and primarily driven by growth in Northern Africa and Mexico.

Gross margins improved to 20.7% during the second quarter compared to 11.6% in last year's second quarter. In the second quarter of last year, the company recorded a $0.3 million inventory valuation reserve for stevia due to the company's evaluation of its projected yields and agronomic practices. Gross margins improved for the third consecutive quarter as a result of success the company is achieving in trying to capture the most value possible for its seed inventory through a series of initiatives, including its optimization program.

Net income for the second quarter of fiscal 2014 was $110,000 compared to net income of $147,000 during the second quarter of last year.

Adjusted EBITDA, a non-GAAP metric, for the second quarter of fiscal 2014 improved to $883,000 compared to $516,000 in the second quarter of fiscal 2013.

Outlook

Based upon the evaluation of information currently available to management, the company is narrowing its estimates of annual revenues to be in the range of $52 to $58 million as the company focuses its operations on improving gross margins, as well as a shift of anticipated shipments to the following year. Revenues for the third quarter of fiscal year 2014 are expected to be approximately $7 million.