Cyanotech Corp. (Nasdaq: CYAN), a world leader in microalgae-based, high-value nutrition and health products, announced financial results for the third quarter and first nine months of fiscal year 2015, ended Dec. 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 percent. Gross profit was $4,353,000, with gross profit margin of 49 percent, compared to gross profit of $3,145,000 and gross profit margin of 42 percent. 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 percent) in the third quarter. This is our second consecutive quarterly record. Our Nutrex packaged consumer products business (+52 percent) was the primary driver of this growth. Third quarter net sales growth of our Nutrex business, by channel, was:
- Nutrex Mainland: +65 percent
- Nutrex Hawaii: +35 percent
- Nutrex Direct (online): +25 percent
- Nutrex International: +27 percent
“BioAstin retail market share of Astaxanthin in the US natural products channel was 57 percent (+5 pts.). Nutrex Spirulina market share was 51 percent (+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 percent increase versus prior year. The growth was driven by a 49 percent (+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.”
Looking forward, Cyanotech reported that its new Astaxanthin extraction system was delivered to their production facility in Kailua-Kona, Hawaii, 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 Dec. 31, 2014 compared to the first nine months ended Dec. 31, 2013, net sales were $24,968,000 compared to $21,646,000 an increase of 15 percent. Gross profit was $11,597,000, with gross profit margin of 46 percent, compared to gross profit of $8,990,000 and gross profit margin of 42 percent. 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 Dec. 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 percent. Gross profit was $14,171,000, with gross profit margin of 44 percent, compared to gross profit of $11,697,000 and gross profit margin of 41 percent. 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.