Cyanotech Reports Financial Results for the First Quarter of Fiscal Year 2014

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Cyanotech Reports Financial Results for the First Quarter of Fiscal Year 2014

— Consumer products retail business shows solid growth in stores and online —

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 2014, ended June 30, 2013.


First Quarter 2014

For the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013, net sales were $6,909,000 compared to $6,506,000, an increase of 6%. Gross profit was $2,852,000, with gross profit margin of 41.3%, compared to gross profit of $2,574,000 and gross profit margin of 39.6%. Net income was $30,000 or $0.01 per diluted share, compared to net income of $493,000 or $0.08 per diluted share.

After having recognized a $2,021,000 tax benefit during the quarter ended March 31, 2013 from the release of a valuation allowance against deferred tax assets, the Company now recognizes a provision for income taxes. As a result, the Company's effective tax rate increased during the quarter ended June 30, 2013. Pretax income for the first quarter was $136,000 compared to $503,000 for the first quarter of fiscal 2013.

Regarding the first quarter of fiscal 2014 results (changes shown versus the first quarter of fiscal 2013), Brent Bailey, President and CEO, stated, "First quarter results keep us on track to achieve our full year objectives.

"Total company net sales growth in the first quarter was a modest +6%. However, our consumer products business (Nutrex) grew +44% and accounted for 55% of net sales in the quarter:

   Nutrex Mainland:  +64%
Nutrex Hawaii:+34%
Nutrex Direct:+45%
Nutrex International:+22%
 

"Retail sales growth of our Astaxanthin products in the U.S. natural products channel was +84% with market share of 52.8% (+21.8 pts.). Our Spirulina retail dollar growth for the quarter was +39% with a market share of 48.8% (+7.3 pts.). Continuing the focus on building our consumer packaged business, we recently began a test of our Hawaii marketing plan in a West Coast market. Initial results have been very encouraging, with growth more than 40% greater than the remainder of the country after the first two months.

"Operating income for the first quarter met our expectations and was impacted by the cost of the West Coast test market, as well as the costs associated with the people and infrastructure investments that were begun in fiscal 2013 and which are driving the strong topline growth we are seeing in our consumer business. Additionally, legal fees increased compared to the first quarter of last year."

Trailing 12 Months

For the trailing 12 months ended June 30, 2013 compared to the trailing 12 months ended June 30, 2012, net sales were $27,984,000 compared to $25,187,000, an increase of 11.1%. Gross profit was $11,236,000, with gross profit margin of 40.2%, compared to gross profit of $10,244,000 and gross profit margin of 40.7%. Net income was $3,746,000 or $0.67 per diluted share, compared to net income of $3,639,000 or $0.65 per diluted share.

About CyanotechCyanotech 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 in more than 40 countries worldwide. Cyanotech was the first microalgae company in the world to obtain quality management standards ISO 9001:2000 certification and is GMP-certified by the Natural Products Association™. 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, 2013. 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

(Dollars in thousands except par value and number of shares)

(Unaudited)

 
    

June 30,
2013

    March 31,
2013
ASSETS
Current assets:
Cash and cash equivalents$3,104$4,364
Accounts receivable, net of allowance for doubtful accounts of $6 at June 30, 2013 and $6 at March 31, 20133,8963,766
Inventories, net4,2133,688
Deferred tax assets110110
Prepaid expenses and other current assets651 263 

Total current assets

11,97412,191
 
Equipment and leasehold improvements, net10,1988,835
Restricted cash2,7173,360
Deferred tax assets3,3233,429
Other assets811 772 
Total assets$29,023 $28,587 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt$156$128
Customer deposits2933
Accounts payable2,2091,852
Accrued expenses751 872 

Total current liabilities

3,1452,885
 
Long-term debt, excluding current maturities5,4185,454
Deferred rent21 21 
Total liabilities8,584 8,360 
 
Commitments and contingencies
 
Stockholders' equity:
Common stock of $0.02 par value, shares authorized 50,000,000; 5,465,788 shares issued and outstanding at June 30, 2013 and 5,463,938 at March 31, 2013109109
Additional paid-in capital29,25929,077
Accumulated deficit

(8,929

)

 

(8,959)
Total stockholders' equity20,439 20,227 
 
Total liabilities and stockholders' equity$29,023 $28,587 
 
 
CYANOTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 

(Dollars in thousands, except per share amounts)

(Unaudited)

    
Three Months Ended June 30,
2013    2012
 
NET SALES$6,909$6,506
COST OF SALES4,0573,932
Gross Profit2,8522,574
 
OPERATING EXPENSES:
General and administrative1,5561,148
Sales and marketing1,004838
Research and development11551
Loss on disposal of equipment and leasehold improvements522
Total operating expenses2,6802,059
 
Income from operations172515
 
Interest expense, net3612
 
Income before provision for income taxes136503
 
PROVISION FOR INCOME TAXES10610
 
NET INCOME$30$493
 
NET INCOME PER SHARE:
Basic$0.01$0.09
Diluted$0.01$0.08
 
SHARES USED IN CALCULATION OF NET INCOME PER SHARE:
Basic5,4645,441
Diluted5,6155,873

anImage


Cyanotech Corporation
Bruce Russell, 310-346-6131
brussell@cyanotech.com

KEYWORDS:   United States  North America  Hawaii

INDUSTRY KEYWORDS:

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