Cyanotech Corp. (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, announced financial results for the second quarter and first six months of fiscal year 2015, ended Sept. 30, 2014.
Second quarter fiscal year 2015
For the second quarter of fiscal 2015 compared to the second quarter of fiscal 2014, net sales were $8,684,000 compared to $7,299,000, an increase of 19 percent. Gross profit was $4,276,000, with gross profit margin of 49 percent, compared to gross profit of $2,993,000 and gross profit margin of 41 percent. Net income was $188,000 or $0.03 per diluted share, compared to net income of $106,000 or $0.02 per diluted share.
Commenting on the second quarter fiscal 2015 results (changes shown vs. second quarter fiscal 2014), Brent Bailey, Cyanotech president and CEO, noted:
“Net sales reached a record $8,684,000 (+19 percent) in the second quarter. Our Nutrex packaged consumer products business (+47 percent) was the primary driver of this growth. The bulk Spirulina business (+32 percent) also had a strong quarter. Second quarter net sales growth of our Nutrex business, by channel, was:
- Nutrex Mainland: +54 percent
- Nutrex Hawaii: +46 percent
- Nutrex Direct (online): +82 percent
- Nutrex International: -3 percent
“The modest decline in the Nutrex International business was related to timing of orders.
“Our BioAstin retail market share of Astaxanthin in the US natural products channel was 58 percent (+5 pts.). Nutrex Spirulina market share was 52 percent (+2 pts.). Initial results from our test in 15 San Diego Costco warehouses are exceeding expectations.
“Operating income for the quarter was $536,000, a healthy +49 percent increase versus prior year. The growth was driven by a 49 percent (+8 pts.) gross margin resulting from strong growth in the Nutrex business and an increase in extraction yields. This was partially offset by an increase of $761,000 in legal costs, including final preparation of expert reports, rebuttal of plaintiff’s expert reports and preparation of several counter claims related to ongoing litigation. Excluding these legal costs, operating income for the quarter was $1,417,000, 16.3 percent of net sales, and +$938,000 versus prior year. In addition, sales and marketing expenses increased by $282,000, as planned, to support the San Diego test market and the strong Nutrex revenue growth. Excluding these legal costs, pretax earnings for the quarter were $1.4 million compared to $0.5 million for the same period last year, and basic earnings per share were $0.25 per share in the current quarter compared to $0.08 for the same period last year. Please review the Company’s 10Q for detailed information.
“After three consecutive sub-par quarters, Astaxanthin production in the second quarter was up +16 percent versus prior year including the second best month in Cyanotech history in September. This improvement was driven by greater strain productivity, increased algae density and several additional process changes. All are expected to significantly increase our Astaxanthin production for the foreseeable future.”
First six months
For the first six months ended Sept. 30, 2014 compared to the first six months ended September 30, 2013, net sales were $16,126,000 compared to $14,208,000 an increase of 14 percent. Gross profit was $7,244,000, with gross profit margin of 45 percent, compared to gross profit of $5,845,000 and gross profit margin of 40 percent. Net loss was ($225,000) or ($0.04) per diluted share, compared to net income of $136,000 or $0.02 per diluted share.
Trailing 12 months
For the trailing 12 months ended Sept. 30, 2014 compared to the trailing 12 months ended September 30, 2013, net sales were $30,823,000 compared to $28,347,000 an increase of 9 percent. Gross profit was $12,963,000, with gross profit margin of 42 percent, compared to gross profit of $11,419,000 and gross profit margin of 40 percent. Net loss was ($557,000) or ($0.07) per diluted share, compared to net income of $3,377,000 or $0.43 per diluted share.