Cyanotech Reports Financial Results for the Third Quarter and First Nine Months of Fiscal Year 2015
Cyanotech Corporation (Nasdaq: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the third quarter and first nine months of fiscal year 2015, ended December 31, 2014.
Third Quarter Fiscal Year 2015
For the third quarter of fiscal 2015 compared to the third quarter of fiscal 2014, net sales were $8,842,000 compared to $7,438,000, an increase of 19%. Gross profit was $4,353,000, with gross profit margin of 49%, compared to gross profit of $3,145,000 and gross profit margin of 42%. Net income was $304,000 or $0.05 per diluted share, compared to net income of $36,000 or $0.01 per diluted share.
Commenting on the third quarter fiscal 2015 results (changes shown vs. third quarter fiscal 2014), Brent Bailey, Cyanotech President and CEO, noted:
“Net sales reached a record $8,842,000 (+19%) in the 3rd Quarter. This is our second consecutive quarterly record. Our Nutrex packaged consumer products business (+52%) was the primary driver of this growth. Third quarter net sales growth of our Nutrex business, by channel, was:
- Nutrex Mainland: +65%
- Nutrex Hawaii: +35%
- Nutrex Direct (online): +25%
- Nutrex International: +27%
“BioAstin retail market share of Astaxanthin in the US natural products channel was 57% (+5 pts.). Nutrex Spirulina market share was 51% (+3 pts.).
“Our test in 15 San Diego Costco warehouses continues to perform well. Distribution was expanded to an additional 45 Costco warehouses in Arizona, Colorado, New Mexico, Utah and Los Angeles in early February.
“Operating income for the quarter was $783,000, a healthy +143% increase versus prior year. The growth was driven by a 49% (+7 pts.) gross margin resulting from strong growth in the Nutrex business and an increase in extraction yields. This was partially offset by a planned $462,000 increase in sales and marketing expenses to support the San Diego test market and the strong Nutrex growth. In addition, legal costs for the litigation that was resolved in December increased by $136,000. Excluding these legal costs, pretax earnings for the quarter were $1,411,000 compared to $813,000 for the same period last year, and basic earnings per share were $0.14 per share in the current quarter compared to $0.07 for the same period last year.” Please review the Company’s 10-Q for detailed information.
Looking forward, Cyanotech reported that its new Astaxanthin extraction system was delivered to their production facility in Kailua-Kona, HI last November, has been installed in a new extraction building and is expected to be in full operation in the first quarter of fiscal 2016. “It is expected to significantly reduce costs and production time for our natural Astaxanthin product, demand for which has steadily increased,” said Bailey.
Astaxanthin is produced from microalgae cultivated and grown at Cyanotech’s facility in Kona, Hawaii. After harvest, the microalgae biomass has historically been shipped to the US mainland or New Zealand where the Astaxanthin has been extracted. This process added several weeks to production time and significant costs.
The new onsite supercritical carbon dioxide extraction system was designed and built in Germany by Uhde High Pressure Technologies a division of ThyssenKrupp. The state-of-the-art extraction system employs supercritical carbon dioxide at 15,000 psi (1,000 bar) for the rapid and efficient extraction of carotenoids, such as Astaxanthin, without the use of organic solvents.
First Nine Months
For the first nine months ended December 31, 2014 compared to the first nine months ended December 31, 2013, net sales were $24,968,000 compared to $21,646,000 an increase of 15%. Gross profit was $11,597,000, with gross profit margin of 46%, compared to gross profit of $8,990,000 and gross profit margin of 42%. Net income was $79,000 or $0.01 per diluted share, compared to net income of $172,000 or $0.03 per diluted share.
Excluding legal costs related to the recently settled litigation, pretax earnings for the first nine months were $3,188,000 compared to $1,768,000 for the same period last year, and basic earnings per share were $0.32 in the first nine months compared to $0.14 for the same period last year. Please review the Company’s 10-Q for detailed information.
Trailing 12 Months
For the trailing 12 months ended December 31, 2014 compared to the trailing 12 months ended December 31, 2013, net sales were $32,227,000 compared to $28,543,000 an increase of 13%. Gross profit was $14,171,000, with gross profit margin of 44%, compared to gross profit of $11,697,000 and gross profit margin of 41%. Pretax loss was ($608,000) compared to pretax income of $1,344,000, and net loss was ($288,000) or ($0.05) per diluted share, compared to net income of $2,805,000 or $0.50 per diluted share. Excluding legal costs related to the recently settled litigation, pretax income for the trailing 12 months was $3,252,000 compared to $2,338,000 for the same period last year.
About Cyanotech - Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin(R) Natural Astaxanthin and Hawaiian Spirulina Pacifica(R)-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 December 31, 2014, 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.)
|CONDENSED CONSOLIDATED BALANCE SHEETS|
(Dollars in thousands except par value and number of shares)
|December 31,||March 31,|
|Cash and cash equivalents||$||2,541||$||4,312|
|Accounts receivable, net of allowance for doubtful accounts of $6 at December 31, 2014 and $6 at March 31, 2014||3,804||3,347|
|Deferred tax assets||216||216|
|Prepaid expenses and other current assets||406||339|
|Total current assets||13,507||13,090|
|Equipment and leasehold improvements, net||13,957||11,826|
|Deferred tax assets||3,095||3,124|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Current maturities of long-term debt||$||209||$||204|
|Total current liabilities||5,133||4,192|
|Long-term debt, excluding current maturities||5,103||5,263|
|Commitments and contingencies|
|Common stock of $0.02 par value, shares authorized 50,000,000; 5,552,999 shares issued and outstanding at December 31, 2014 and 5,488,038 shares at March 31, 2014||111||110|
|Additional paid-in capital||30,646||29,891|
|Total stockholders’ equity||21,682||20,847|
|Total liabilities and stockholders’ equity||$||31,925||$||30,310|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
(Dollars in thousands, except per share amounts)
|Three Months Ended||Nine Months Ended|
|December 31,||December 31,|
|COST OF SALES||4,489||4,293||13,371||12,656|
|General and administrative||1,829||1,685||6,746||4,502|
|Sales and marketing||1,473||1,011||4,169||3,195|
|Research and development||155||108||376||394|
|Loss on disposal of equipment and leasehold improvements||113||19||126||45|
|Total operating expenses||3,570||2,823||11,417||8,136|
|Income from operations||783||322||180||854|
|Interest expense, net||(23||)||(29||)||(71||)||(90||)|
|Income before income tax||760||293||109||764|
|INCOME TAX EXPENSE||456||257||30||592|
|NET INCOME PER SHARE:|
|SHARES USED IN CALCULATION OF NET INCOME PER SHARE:|
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