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— Sales increase 20%, EPS $0.09 vs ($0.12) —
Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, announced financial results for the first quarter of fiscal year 2018, ended June 30, 2017.
First Quarter 2018
For the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017, net sales were $8,809,000 compared to $7,322,000, an increase of 20.3%. Gross profit was $3,603,000, with gross profit margin of 40.9%, compared to gross profit of $2,821,000 and gross profit margin of 38.5%. Operating income was $620,000 compared to operating loss of ($610,000). Net income was $501,000 or $0.09 per diluted share, compared to net loss of ($691,000) or ($0.12) per diluted share.
Commenting on the first quarter results (changes shown vs. first quarter of fiscal 2017), Gerry Cysewski, Ph.D., Cyanotech’s CEO, noted:
“We are seeing positive results from the many changes we put in place during the last fiscal year. Our results this quarter reflected our continuing strategic focus on marketing our Nutrex Hawaii branded products at retail, as well as improved production practices and reduction in our cost structure.
“Net sales increased 20% for the quarter, driven by a 42% increase in our packaged products, offset by a 34% decrease in bulk sales. The increase in sales of our packaged products was the result of our continued focus on strategic channels. Sales of our packaged astaxanthin increased 51%, which is primarily the result of increased sales to Costco. Sales growth at Amazon contributed to a 22% increase in our packaged spirulina sales. Due to inventory shortages following low spirulina production in the fourth quarter of fiscal 2017 we were not able to fulfill all of the demand for packaged spirulina products this quarter. Compared to the fourth quarter of fiscal 2017, sales to Costco increased 100% and sales to Amazon increased 149%, the latter driven mainly by an inventory build. We achieved these results without increasing our year-over-year sales and marketing operating expenses.
“The 34% decrease in sales of our bulk products is primarily the result of the lack of available spirulina supply during the quarter. International sales represented 27% of net sales for the current quarter compared to 35% for the same period last year.
“Our gross profit margin increased by 2.4 percentage points compared to the same period last year due to improved customer and product mix and lower astaxanthin costs from prior quarters’ production. Additionally, astaxanthin production for the quarter increased by over 20% compared to the same period last year as a result of new cultivation techniques and farm management practices that have been integrated over the last two years. We are pleased to see the results of these changes; specifically, stabilized open pond cultivation and improved consistency of our production over recent quarters.
“Operating expenses decreased $0.4 million (-13%) for the first quarter of fiscal 2018 compared to the same period in fiscal 2017, primarily due to a reduction in legal fees. Our sales and marketing spending includes labor savings of $120,000, half of which was deployed back into marketing programs to drive sales growth in our areas of strategic focus.”
Trailing 12 Months ended June 30, 2017
For the trailing 12 months ended June 30, 2017 compared to the trailing 12 months ended June 30, 2016, net sales were $33,529,000 compared to $31,568,000, an increase of 6.2%. Gross profit was $13,006,000, with gross profit margin of 38.8%, compared to gross profit of $11,763,000 and gross profit margin of 37.3%. Net loss was ($23,000) or $0.0 per diluted share, compared to a net loss of ($4,981,000) or ($0.89) per diluted share.
Please review the Company’s Form 10-Q for the quarter ended June 30, 2017 for more detailed information.
— Cyanotech will host a Skype broadcast at 5:00 p.m. EDT on Friday, August 11, 2017 to respond to questions about its operating results and other topics of interest. Interested parties are asked to submit questions to firstname.lastname@example.org before 5:00 p.m. EDT on Thursday, August 10, 2017. The Company will respond to relevant questions only, and will not be accepting any questions or comments during the broadcast.
To join the broadcast, please browse http://cyanotech.com/meet approximately five minutes prior to the start time.
About Cyanotech — Cyanotech Corporation, a world leader in microalgae technology for over 30 years, produces BioAstin® Hawaiian Astaxanthin® and Hawaiian Spirulina Pacifica®. These all natural, dietary ingredients and supplements leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. The Company’s mission is to fulfill the promise of whole health through Hawaiian microalgae. Cyanotech’s BioAstin® offers superior antioxidant activity which supports skin, eye and joint health, as well as recovery from exercise*. Cyanotech’s Spirulina products offer nutrition that supports cardiovascular health and immunity.* All Cyanotech products are produced from microalgae grown at our 90-acre facility in Kona, Hawaii, using patented and proprietary technology and are Generally Recognized as Safe (GRAS) for use in food products. Cyanotech sells its products direct to consumers at retail locations in the United States and online at www.nutrex-hawaii.com and also distributes to dietary supplement, nutraceutical and cosmeceutical manufacturers and marketers. The Company is regulated by the FDA. Visit www.cyanotech.com for more information.
*These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.
“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995 Besides statements of present fact and historical fact, this press release may contain forward-looking statements. Forward-looking statements relate to the future and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution against relying on forward-looking statements. Important factors that could change actual, future results include: changes in sales levels to our largest customers, weather patterns in Hawaii, production problems, risks associated with new products, foreign exchange fluctuations, and availability of financing, as well as national and global political, economic, business, competitive, market and regulatory conditions. Other factors are more fully detailed in the Company’s annual Form 10-K filings with the Securities and Exchange Commission.
Financial Tables Follow: The following tables do not contain footnotes or other information contained in the Company’s Form 10-Q for the period ended June 30, 2017, which can be found on the Cyanotech website (www.cyanotech.com) under Investors>Investor Filings upon filing. As such the following Financial Tables are provided only as a guide and other factors are more fully detailed in the Company’s annual Form 10-Q filings with the Securities and Exchange Commission.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(In thousands, except per share amounts)|
|June 30,||March 31,|
|Accounts receivable, net of allowance for doubtful accounts of $31 at June 30, 2017 and $49 at March 31, 2017||2,619||2,135|
|Prepaid expenses and other current assets||427||565|
|Total current assets||12,326||12,079|
|Equipment and leasehold improvements, net||16,289||16,712|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Line of credit||$||500||$||611|
|Current maturities of long-term debt||624||623|
|Total current liabilities||5,479||6,032|
|Long-term debt, less current maturities||6,105||6,249|
|Other long term liabilities||99||116|
|Commitments and contingencies|
|Preferred stock of $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding||—||—|
|Common stock of $0.02 par value, authorized 50,000,000 shares; 5,685,381 shares issued and outstanding at June 30, 2017 and March 31, 2017||114||114|
|Additional paid-in capital||31,608||31,577|
|Total stockholders’ equity||17,139||16,607|
|Total liabilities and stockholders’ equity||$||28,822||$||29,004|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except per share amounts)|
|Three Months Ended June|
|COST OF SALES||5,206||4,501|
|General and administrative||1,352||1,710|
|Sales and marketing||1,489||1,555|
|Research and development||142||166|
|Total operating expenses||2,983||3,431|
|Income (loss) from operations||620||(610||)|
|Interest expense, net||108||132|
|Income (loss) before income tax||512||(742||)|
|INCOME TAX EXPENSE (BENEFIT)||11||(51||)|
|NET INCOME (LOSS)||$||501||$||(691||)|
|NET INCOME (LOSS) PER SHARE:|
|SHARES USED IN CALCULATION OF NET INCOME (LOSS) PER SHARE:|
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