Cyanotech Reports Financial Results for the Second Quarter and First Six Months of Fiscal 2020

Nov 12, 2019 08:00 am
KAILUA KONA, Hawaii -- 

Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, announced financial results for the second quarter and first six months of fiscal year 2020, ended September 30, 2019.

Second Quarter Fiscal 2020

Cyanotech reported net sales of $7,690,000 for the second quarter of fiscal 2020 compared to $6,954,000 for the second quarter of fiscal 2019. Gross profit was $3,063,000, with gross profit margin of 39.8%, compared to gross profit of $2,285,000 and gross profit margin of 32.9%. Operating income was $409,000 compared to operating loss of ($1,004,000). Net income was $228,000 or $0.04 per diluted share, compared to net loss of ($1,136,000) or ($0.20) per diluted share.

Commenting on the second quarter fiscal 2020 results (changes shown vs. the second quarter of fiscal 2019), Cyanotech’s Chief Executive Officer, Gerald R. Cysewski, Ph.D., said:

“Second quarter of fiscal 2020 results reflect a more normalized balance of operational production, sales and controlled expenses. Our goal and focus going forward is to refine and enhance this interplay of core corporate function.”

Providing further detail about the fiscal results, Cyanotech’s Vice President Finance and CFO, Brian Orlopp, added,

“Net sales increase of 10.6% for the second quarter compared to the same period last year was primarily driven by a 10.0% increase in astaxanthin sales, and a 5.8% increase in spirulina sales. The increase compared to prior year was a result of a lack of available product in the prior year.”

“Gross profit as a percent of net sales increased by 6.9 percentage points compared to the same period last year, primarily due to the improvements in production costs for both spirulina and astaxanthin.”

“Operating expenses decreased $0.6 million for the current quarter compared to the same period last year, primarily due to strategic cost cutting initiatives, including lower promotional and marketing spending of $0.3 million.”

Six Months Fiscal 2020

For the six months ended September 30, 2019 compared to the six months ended September 30, 2018, net sales were $15,761,000 compared to $14,099,000. Gross profit was $6,738,000, with gross profit margin of 42.8%, compared to $4,121,000 and 29.2%, respectively. Net income was $95,000 or $0.02 per diluted share, compared to net loss of ($2,411,000) or ($0.42) per diluted share.

Please review the Company’s Form 10-Q for the period ended September 30, 2019 for more detailed information.

— Cyanotech will host a Skype broadcast at 8:00 PM EST on Wednesday, November 13, 2019 to respond to questions about its operating results and other topics of interest. Interested parties are asked to submit questions to [email protected] before 12 p.m. (noon) EST on Wednesday, November 13, 2019. The Company will respond only to relevant questions relating to the Company’s second quarter fiscal 2020 financial performance 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 more than 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 96-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 second quarter fiscal 2020 ended September 30, 2019, 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

(In thousands, except per share amounts)

(Unaudited)

 

 

 

September 30,
2019

 

March 31,
2019

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

1,094

 

 

$

840

 

Accounts receivable, net of allowance for doubtful accounts of $13 at September 30, 2019 and $27 at March 31, 2019

 

 

1,655

 

 

 

1,982

 

Inventories, net

 

 

11,129

 

 

 

11,274

 

Prepaid expenses and other current assets

 

 

448

 

 

 

496

 

Total current assets

 

 

14,326

 

 

 

14,592

 

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

 

13,867

 

 

 

14,752

 

Operating lease right-of-use assets, net

 

 

3,983

 

 

 

—

 

Other assets

 

 

261

 

 

 

282

 

Total assets

 

$

32,437

 

 

$

29,626

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,838

 

 

$

4,922

 

Accrued expenses

 

 

834

 

 

 

992

 

Customer deposits

 

 

304

 

 

 

626

 

Operating lease obligations, current portion

 

 

304

 

 

 

—

 

Short-term contract obligation

 

 

54

 

 

 

285

 

Line of credit

 

 

2,000

 

 

 

2,000

 

Current maturities of long-term debt

 

 

673

 

 

 

663

 

Total current liabilities

 

 

7,007

 

 

 

9,488

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

6,349

 

 

 

5,172

 

Long-term operating lease obligations

 

 

3,679

 

 

 

—

 

Other long-term liabilities

 

 

58

 

 

 

57

 

Total liabilities

 

 

17,093

 

 

 

14,717

 

 

 

 

 

 

 

 

 

 

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; issued and outstanding 5,913,421 shares at September 30, 2019 and 5,879,710 shares at March 31, 2019

 

 

118

 

 

 

117

 

Additional paid-in capital

 

 

32,786

 

 

 

32,447

 

Accumulated deficit

 

 

(17,560

)

 

 

(17,655

)

Total stockholders’ equity

 

 

15,344

 

 

 

14,909

 

Total liabilities and stockholders’ equity

 

$

32,437

 

 

$

29,626

 

CYANOTECH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Six Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

7,690

 

 

$

6,954

 

 

$

15,761

 

 

$

14,099

 

Cost of sales

 

 

4,627

 

 

 

4,669

 

 

 

9,023

 

 

 

9,978

 

Gross profit

 

 

3,063

 

 

 

2,285

 

 

 

6,738

 

 

 

4,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

1,157

 

 

 

1,481

 

 

 

3,188

 

 

 

2,853

 

Sales and marketing

 

 

1,343

 

 

 

1,597

 

 

 

2,751

 

 

 

3,020

 

Research and development

 

 

154

 

 

 

211

 

 

 

341

 

 

 

419

 

Total operating expenses

 

 

2,654

 

 

 

3,289

 

 

 

6,280

 

 

 

6,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

409

 

 

(1,004

)

 

 

458

 

 

(2,171

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(182

)

 

 

(150

)

 

 

(367)

 

 

(280

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

227

 

 

(1,154

)

 

 

91

 

 

(2,451

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(1

)

 

 

(18

)

 

 

(4)

 

 

(40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

228

 

$

(1,136

)

 

$

95

 

$

(2,411

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

(0.20

)

 

$

0.02

 

$

(0.42

)

Diluted

 

$

0.04

 

$

(0.20

)

 

$

0.02

 

$

(0.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in calculation of net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

5,965

 

 

 

5,806

 

 

 

5,942

 

 

 

5,796

 

Diluted

 

 

5,973

 

 

 

5,806

 

 

 

5,963

 

 

 

5,796

 

 

Bruce Russell
(310) 346-6131
[email protected]