S&W Seed prices public offering and results for the third quarter
Ian Gilson, CFA
On May 18, 2012 S&W Seed (SANW) announced the pricing of a one million share public offering made under the shelf registration of Feb. 10, 2012. The stock was priced at $5.50 a share and the expected closing is May 23, 2012. We have adjusted our estimates by increasing the share count to 6.2 million shares for the fourth quarter, 5.93 million for the full year 2012 and 6.8 million for the first quarter and full fiscal year 2014. We have also added estimates of the year-end balance sheet.
The proceeds will probably be used to buy land, consistent with the company's recent actions.
On May 9, 2012 S&W Seed announced its third fiscal quarter results. We had assumed a more normal seasonal pattern in sales, that is very low levels in the third and fourth quarters. However, the very high level of demand for seed had to be met from selling seed in inventory plus the purchase of some seed (245,000 lbs, worth about $2 million was purchased in the quarter) from external sources.
The average price for the seed sold was $3.85 a pound, up slightly from the second quarter.
We estimate that some alfalfa seed will be sold in the fourth quarter, but not much. Then the first fiscal quarter starts the normal high season.
The company announced the purchase of 640 acres and the lease of an additional 1,240 acres adjacent to the 640. The acres are in Calipatria CA, in the Imperial Valley just south of the Salton Sea. This area is warmer than Five Points and the San Joaquin Valley and the crops mature about two months earlier. The first seeds should be planted in the fall of this year and harvested in July 2013. This increases the potential acreage for alfalfa to 6,554 for the 2014 growing season.
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