Cyanotech Reports Financial Results for the First Quarter of Fiscal Year 2015
— Net sales of Nutrex packaged consumer products grew +48% —
KAILUA KONA, Hawaii--(BUSINESS WIRE)--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 2015, ended June 30, 2014.
“However, financial performance was disappointing due to”
First Quarter Fiscal Year 2015
For the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014, net sales were $7,442,000 compared to $6,909,000, an increase of 7.7%. Gross profit was $2,968,000, with gross profit margin of 39.9%, compared to gross profit of $2,852,000 and gross profit margin of 41.3%. Net loss was ($413,000) or ($0.08) per diluted share, compared to net income of $30,000 or $0.01 per diluted share.
Commenting on the first quarter fiscal 2015 results (changes shown vs. first quarter fiscal 2014), Brent Bailey noted:
“Excellent progress continued in the first quarter on strategic priorities that we expect to drive long term growth. Net sales in our Nutrex packaged consumer products grew +48%. First quarter net sales growth of our Nutrex business, by channel, was:
- Nutrex Mainland: +49%
- Nutrex Hawaii: +27%
- Nutrex Direct (online): +57%
- Nutrex International: +68%
“Our new, larger Nutrex warehouse club sizes included in a costco.com national mailer substantially exceeded expectations in the first quarter. As a result of many years of strong retail sales for BioAstin in Costco’s Hawaii warehouses, a 15-warehouse test with Costco in San Diego will begin in September. Our BioAstin retail market share of Astaxanthin in the US natural products channel was 57% (+5 pts.). Nutrex Spirulina retail market share was 46% (-1 pt.) in the first quarter.
“However, financial performance was disappointing due to:
- Legal costs related to ongoing litigation
- Increased Astaxanthin costs due to poor fourth quarter fiscal 2014 production
“The result was an operating loss of ($1.1 million) for the quarter.
“Operating expenses for the quarter include $1.5 million in legal costs related to ongoing litigation, compared to $0.3 million in the same period last year. Litigation expenses in the first quarter were exceptionally high due to extension of discovery and depositions, development of economic and medical expert reports and the oral hearing with the Patent Board on our Inter Partes Review. Excluding these legal costs, pretax earnings for the quarter were $0.3 million compared to $0.4 million for the same period last year, and basic earnings per share were $0.06 per share in the current quarter compared to $0.08 per share for the same period last year. Please review the Company’s 10Q for detailed information.
“Poor fourth quarter fiscal 2014 Astaxanthin production resulted in higher first quarter fiscal 2015 costs and a negative gross margin impact of $466,000 versus prior year. First quarter fiscal 2015 Astaxanthin production was down -17% versus first quarter fiscal 2014. However, it was up +103% versus fourth quarter fiscal 2014 and the gap versus year ago narrowed each month of the quarter. The favorable trend is attributable to seasonal improvement in weather, a +49% increase from the strain productivity program and a +15% increase from the algae density improvement program. We believe these initiatives will continue to increase the level and consistency of production in the future.
Trailing 12 Months
For the trailing 12 months ended June 30, 2014 compared to the trailing 12 months ended June 30, 2013, net sales were $29,438,000 compared to $27,984,000 an increase of 5.2%. Gross profit was $11,680,000, with gross profit margin of 39.7%, compared to gross profit of $11,236,000 and gross profit margin of 40.2%. Net loss was $639,000 or -$0.15 per diluted share, compared to net income of $3,746,000 or $0.67 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 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, 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)
|Cash and cash equivalents||$||3,393||$||4,312|
|Accounts receivable, net of allowance for doubtful accounts of $6 at June 30, 2014 and $6 at March 31, 2014||3,064||3,347|
|Deferred tax assets||216||216|
|Prepaid expenses and other current assets||397||339|
|Total current assets||11,888||13,090|
|Equipment and leasehold improvements, net||12,417||11,826|
|Deferred tax assets||3,875||3,124|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Current maturities of long-term debt||$||210||$||204|
|Total current liabilities||4,336||4,192|
|Long-term debt, excluding current maturities||5,206||5,263|
|Commitments and contingencies|
|Common stock of $0.02 par value, shares authorized 50,000,000; 5,488,038 shares issued and outstanding at June 30, 2014 and 5,488,038 at March 31, 2014||110||110|
|Additional paid-in capital||30,084||29,891|
|Total stockholders’ equity||20,627||20,847|
|Total liabilities and stockholders’ equity||$||30,177||$||30,310|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
|Three Months Ended June 30,|
|COST OF SALES||4,474||4,057|
|General and administrative||2,747||1,556|
|Sales and marketing||1,234||1,004|
|Research and development||116||115|
|Loss on disposal of equipment and leasehold improvements||10||5|
|Total operating expenses||4,107||2,680|
|Income (loss) from operations||(1,139||)||172|
|Interest expense, net||25||36|
|Income (loss) before income tax||(1,164||)||136|
|INCOME TAX EXPENSE (BENEFIT)||(751||)||106|
|NET INCOME (LOSS)||$||(413||)||$||30|
|NET INCOME (LOSS) PER SHARE:|
|SHARES USED IN CALCULATION OF NET INCOME (LOSS) PER SHARE:|