S&W Seed: Over $2 million of revenue deferred from the fourth quarter

Ian Gilson, CFA

On September 27, 2012 the S&W Seed ( ( SANW ) ) reported fiscal 2012 results. Revenue was below our estimate of $1.7 million due to alfalfa sales being held back to take advantage of price increases expected in August, 2012. About 650,000 pounds of high quality seed were not sold, which would have added about $2.5 million in revenue at the current price of seed to the fourth quarter and close to $0.10 to EPS. This revenue deferral will impact the first fiscal quarter of 2013, and we have adjusted our estimates accordingly. It is possible that the company may decide to hold back sales in future quarters but that action cannot be forecast by us. Prices continue to increase and have gained nearly 5% over this month alone.

Fourth quarter revenue was $0.8 million. Due to a loss from growing wheat and triticale on some land being prepared for alfalfa seeding, earnings for the quarter was a negative $0.10 a share. Part of this loss was due to poor yields on the wheat and some was due to higher expenses than prior levels. Expenses for fertilizer have increased significantly from year ago levels and this will carry through fiscal 2013.

The second crop of stevia leaf has been harvested and is in the process of being dried. These are the plants in the original 114 acres. About 75% of the field was harvested with the rest being kept to measure the impact of fewer harvesting periods. The other 150 acres and all of the 114 acres will be cropped in 2012 calendar year.

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