CYANOTECH CORPORATION Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the first quarter of fiscal year 2017, ended June 30, 2016.
First Quarter 2017
For the first quarter of fiscal year 2017 compared to the first quarter of fiscal year 2016, net sales were $7,322,000 compared to $7,594,000, a decrease of 3.6%. Gross profit was $2,821,000, with gross profit margin of 38.5%, compared to gross profit of $2,924,000 and gross profit margin of 38.5%. Operating loss was ($610,000) compared to operating loss of ($195,000). Net loss was ($691,000) or ($0.12) per diluted share, compared to net loss of ($105,000) or ($0.02) per diluted share. Contributing to the loss are legal fees related to various ongoing legal matters which totaled $580,000 for the first quarter of fiscal 2017, compared to $42,000 for the first quarter of fiscal 2016. Please review the Company’s Form 10-Q for more detailed information.
Commenting on the first quarter of fiscal 2017 results (changes shown vs. the first quarter of fiscal 2016), Gerry Cysewski, Ph.D., Cyanotech’s Interim President and CEO, noted:
“Net sales declined 3.6% for the quarter, driven by a 14% decrease in our packaged products, offset by a 39% increase in bulk sales. The decline in sales of packaged product compared to the same period last year is the result of limits on the level of discounts offered in low margin channels in the current quarter. This change, which resulted in a 19% decrease in astaxanthin sales and flat spirulina sales, is expected to improve profitability in the long run.
“Sales of our bulk products increased 39%, made up of a 43% increase in spirulina sales and a 25% increase in astaxanthin sales. The increase in bulk sales was driven by increased demand from our international customers, coupled with increased levels of astaxanthin inventory available for sale.
“Our strategy continues to focus on growing the market for higher margin, branded consumer products by emphasizing the higher nutritional content of our Hawaiian spirulina and the benefits of our natural astaxanthin over synthetics. Both are the #1 selling products in their respective categories in the natural products channel.
“During the first quarter, BioAstin sales expanded into an additional 32 warehouse stores in Costco’s Texas region and now is available in 195 Costco warehouses, or roughly 40% of their domestic total.
“We also began extracting 100 percent of our astaxanthin product in our new onsite extraction facility, saving considerable costs and time compared to our earlier process of sending biomass to the mainland US and to New Zealand for extraction.”
Trailing 12 Months ended June 30, 2016
For the trailing 12 months ended June 30, 2016 compared to the trailing 12 months ended June 30, 2015, net sales were $31,568,000 compared to $33,779,000, a decrease of 6.5%. Gross profit was $11,763,000, with gross profit margin of 37.3%, compared to gross profit of $14,331,000 and gross profit margin of 42.4%. Pretax loss was ($1,590,000) compared to pretax income of $1,083,000, and net loss was ($4,981,000) or ($0.89) per diluted share, compared to net income of $252,000 or $0.05 per diluted share.
About Cyanotech — Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin® Natural Astaxanthin and Hawaiian Spirulina Pacifica®—all natural, functional nutrients that leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. Cyanotech's Spirulina products offer complete nutrition, and augment energy and immune response. They are FDA-reviewed and accepted as Generally Recognized as Safe (GRAS) for use in food products. BioAstin's superior antioxidant activity and ability to support and maintain a natural anti-inflammatory response enhance skin, muscle and joint health. All Cyanotech products are produced from microalgae grown at our 90-acre facility in Kona, Hawaii using patented and proprietary technology. 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 nutritional supplement, nutraceutical and cosmeceutical manufacturers and marketers worldwide and is GMP-certified by the Natural Products AssociationTM. Visit www.cyanotech.com for more information.
“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, 2016, 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-K filings with the Securities and Exchange Commission.)
CYANOTECH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| June 30, 2016 |
March 31, 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,554 | $ | 1,240 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $136 at June 30, 2016 and $136 at March 31, 2016 | 2,246 | 2,983 | ||||||
| Inventories, net | 8,388 | 7,856 | ||||||
| Deferred tax assets | 74 | 74 | ||||||
| Prepaid expenses and other current assets | 604 | 502 | ||||||
| Total current assets | 12,866 | 12,655 | ||||||
| Equipment and leasehold improvements, net | 17,458 | 17,796 | ||||||
| Other assets | 400 | 392 | ||||||
| Total assets | $ | 30,724 | $ | 30,843 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Note payable | $ | 600 | $ | — | ||||
| Current maturities of long-term debt | 579 | 574 | ||||||
| Customer deposits | 65 | 117 | ||||||
| Accounts payable | 3,991 | 4,000 | ||||||
| Accrued expenses | 1,660 | 1,430 | ||||||
| Total current liabilities | 6,895 | 6,121 | ||||||
| Long-term debt, net | 6,653 | 6,790 | ||||||
| Deferred tax liabilities | 74 | 74 | ||||||
| Deferred rent | 34 | 30 | ||||||
| Total liabilities | 13,656 | 13,015 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| 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; 5,648,264 shares issued and outstanding at June 30, 2016 and 5,599,797 at March 31, 2016 | 113 | 112 | ||||||
| Additional paid-in capital | 31,515 | 31,585 | ||||||
| Accumulated deficit | (14,560 | ) | (13,869 | ) | ||||
| Total stockholders’ equity | 17,068 | 17,828 | ||||||
| Total liabilities and stockholders’ equity | $ | 30,724 | $ | 30,843 | ||||
CYANOTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| Three Months Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| NET SALES | $ | 7,322 | $ | 7,594 | ||||
| COST OF SALES | 4,501 | 4,670 | ||||||
| Gross Profit | 2,821 | 2,924 | ||||||
| OPERATING EXPENSES: | ||||||||
| General and administrative | 1,707 | 1,210 | ||||||
| Sales and marketing | 1,555 | 1,732 | ||||||
| Research and development | 166 | 177 | ||||||
| Loss on disposal of equipment and leasehold improvements | 3 | — | ||||||
| Total operating expenses | 3,431 | 3,119 | ||||||
| Loss from operations | (610 | ) | (195 | ) | ||||
| Interest expense, net | 132 | 24 | ||||||
| Loss before income tax | (742 | ) | (219 | ) | ||||
| INCOME TAX BENEFIT | (51 | ) | (114 | ) | ||||
| NET LOSS | $ | (691 | ) | $ | (105 | ) | ||
| NET LOSS PER SHARE: | ||||||||
| Basic | $ | (0.12 | ) | $ | (0.02 | ) | ||
| Diluted | $ | (0.12 | ) | $ | (0.02 | ) | ||
| SHARES USED IN CALCULATION OF NET LOSS PER SHARE: | ||||||||
| Basic | 5,633 | 5,565 | ||||||
| Diluted | 5,633 | 5,565 | ||||||
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