CYAN Cyanotech Corp

Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health dietary supplement products, announced financial results for the third quarter and first nine months of fiscal year 2023, ended December 31, 2022.

Commenting on the third quarter fiscal year 2023 results, Cyanotech’s President and Chief Executive Officer, Matthew K. Custer, said:

“Sales in the third quarter improved by $712,000, or 14%, compared to the second quarter, as we saw modest improvement in consumer movement on both finished goods and bulk sales. However, both of our online finished good sales and our international bulk sales are still not performing to historical levels. On the international bulk sales, as the global supply chain issues eased, customers made adjustments to their inventory levels that impacted our sales. The inventory levels have improved but are still a headwind. We are focused on taking steps and making changes to improve these sales channels.”

“The cash saving initiatives that we implemented in the second quarter, including slowing production and reducing headcount, were not fully realized until late in the third quarter, due to material lead times and payment terms. However, our working capital remains strong due to higher inventories that have long expiration dates.”

Third Quarter Fiscal 2023

Cyanotech reported net sales of $5,891,000 for the third quarter of fiscal 2023 compared to $9,459,000 for the third quarter of fiscal 2022, a decrease of 37.7%. Gross profit was $1,764,000, with gross profit margin of 29.9%, compared to gross profit of $3,238,000, with gross profit margin of 34.2%. Operating loss for the third quarter of fiscal 2023 was $404,000 compared to operating income of $508,000 in the same period of the prior year. Net loss for the current fiscal quarter was $598,000, or $0.10 per diluted share, compared to net income of $386,000, or $0.06 per diluted share, for the same period of the prior year.

First Nine Months of Fiscal 2023

Cyanotech reported net sales of $17,786,000 for the first nine months of fiscal 2023 compared to $27,842,000 for the same period in fiscal 2022, a decrease of 36.1%. Gross profit was $5,872,000, with gross profit margin of 33.0%, compared to gross profit of $10,672,000, with gross profit margin of 38.3%. Operating loss for the first nine months of fiscal 2023 was $1,666,000 compared to operating income of $2,210,000 in the same period of the prior year. Net loss for the first nine months of fiscal 2023 was $2,010,000, or $0.32 per diluted share, compared to net income of $1,877,000, or $0.30 per diluted share, for the same period of the prior year.

Trailing Twelve Months

For the trailing twelve months ended December 31, 2022, compared to the trailing twelve months ended December 31, 2021, net sales were $25,912,000 compared to $37,280,000. Gross profit was $8,766,000, with gross profit margin of 33.8%, compared to $13,442,000 and 36.1%. Net loss was $1,733,000, or $0.28 per diluted share, compared to net income of $1,676,000, or $0.27 per diluted share.

Please review the Company’s Form 10-Q for the period ended December 31, 2022 for more detailed information.

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— Cyanotech will host a virtual broadcast at 8:00 PM EST on Friday, February 10, 2023 to respond to questions about its operating results and other topics of interest. Interested parties are asked to submit questions to questions@cyanotech.com before 12 p.m. (noon) EST on Friday, February 10, 2023. The Company will respond only to relevant questions relating to the Company’s third quarter fiscal 2023 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.

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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 Food and Drug Administration. 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 third quarter fiscal 2023 ended December 31, 2022, 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)

 

 

 

December 31, 2022

 

 

March 31, 2022

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

513

 

 

$

2,589

 

Accounts receivable, net of allowance for doubtful accounts of $35 as of December 31, 2022 and $67 as of March 31, 2022

 

 

2,156

 

 

 

3,664

 

Inventories

 

 

11,574

 

 

 

9,466

 

Prepaid expenses and other current assets

 

 

284

 

 

 

545

 

Total current assets

 

 

14,527

 

 

 

16,264

 

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

 

11,693

 

 

 

11,885

 

Operating lease right-of-use assets, net

 

 

3,463

 

 

 

3,787

 

Other assets

 

 

89

 

 

 

109

 

Total assets

 

$

29,772

 

 

$

32,045

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,031

 

 

$

2,362

 

Accrued expenses

 

 

988

 

 

 

1,412

 

Customer deposits

 

 

97

 

 

 

164

 

Operating lease obligations, current portion

 

 

243

 

 

 

393

 

Line of credit

 

 

1,550

 

 

 

—

 

Line of credit – related party

 

 

500

 

 

 

—

 

Current maturities of long-term debt

 

 

261

 

 

 

490

 

Total current liabilities

 

 

4,670

 

 

 

4,821

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

4,166

 

 

 

4,336

 

Long-term operating lease obligations

 

 

3,203

 

 

 

3,386

 

Other long-term liabilities

 

 

—

 

 

 

15

 

Total liabilities

 

 

12,039

 

 

 

12,558

 

 

 

 

 

 

 

 

 

 

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 6,271,971 shares at December 31, 2022 and 6,202,223 shares at March 31, 2022

 

 

125

 

 

 

124

 

Additional paid-in capital

 

 

33,812

 

 

 

33,557

 

Accumulated deficit

 

 

(16,204

)

 

 

(14,194

)

Total stockholders’ equity

 

 

17,733

 

 

 

19,487

 

Total liabilities and stockholders’ equity

 

$

29,772

 

 

$

32,045

 

CYANOTECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

 

 

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

5,891

 

 

$

9,459

 

 

$

17,786

 

 

$

27,842

 

Cost of sales

 

 

4,127

 

 

 

6,221

 

 

 

11,914

 

 

 

17,170

 

Gross profit

 

 

1,764

 

 

 

3,238

 

 

 

5,872

 

 

 

10,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

1,021

 

 

 

1,403

 

 

 

3,631

 

 

 

4,171

 

Sales and marketing

 

 

1,041

 

 

 

1,127

 

 

 

3,351

 

 

 

3,808

 

Research and development

 

 

106

 

 

 

200

 

 

 

556

 

 

 

483

 

Total operating expenses

 

 

2,168

 

 

 

2,730

 

 

 

7,538

 

 

 

8,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

 

(404

)

 

 

508

 

 

 

(1,666

)

 

 

2,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(186

)

 

 

(116

)

 

 

(333

)

 

 

(312

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

 

(590

)

 

 

392

 

 

 

(1,999

)

 

 

1,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

8

 

 

 

6

 

 

 

11

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(598

)

 

$

386

 

 

$

(2,010

)

 

$

1,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

0.06

 

 

$

(0.32

)

 

$

0.31

 

Diluted

 

$

(0.10

)

 

$

0.06

 

 

$

(0.32

)

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

6,272

 

 

 

6,183

 

 

 

6,235

 

 

 

6,144

 

Diluted

 

 

6,272

 

 

 

6,195

 

 

 

6,235

 

 

 

6,165

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005131/en/

Bruce Russell (310) 346-6131 brussell@cyanotech.com