Ian T. Gilson, CFA
S&W Seed Co. Fourth Quarter results:
S&W Seed Co. (SANW) reported results that were ahead of our expectations with revenue ahead of a year ago, dollars in millions.
| 4Q11A | 4Q11E | 4Q10A | |
| Alfalfa seed revenue | 1.26 | 0.60 | 1.22 |
| Total revenue | 1.36 | 0.70 | 1.23 |
| Operating margins | 24.8% | 35.7% | 22.8% |
| Operating loss | 0.36 | 0.51 | 0.35 |
The company is starting its highest seasonal selling quarter and we expect significant growth in sales in the Middle East now that selling prices are improving. Seed prices have risen in Saudi Arabia, from $2.50 a pound for generic varieties last year to $3.25 a pound.
West Coast US alfalfa hay prices are at record levels, although alfalfa hay is available at lower prices in the Eastern US. The national average price has increased from $117 a ton to $189 a ton (source:USDA). This reduces the pressure from higher prices on other crops and should increase acres planted with alfalfa in fiscal 2012.
The first fiscal quarter of 2012 should show how effective the first planting of stevia is. The year-end balance sheet included $0.220 million of stevia production costs, this will be amortized over the life of the plants as stevia sales occur.
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