KAILUA KONA, Hawaii, Aug 2, 2004 (BUSINESS WIRE) -- Cyanotech Corporation (Nasdaq:CYAN), a world leader in producing high-value natural products from microalgae, today announced financial results for the first quarter of its fiscal year 2005, ended June 30, 2004.
For the first quarter of fiscal 2005, the company reported net income of $113,000, or $0.01 per diluted share, on sales of $2,707,000. This represents a year-over-year improvement from the sales and net loss reported for the comparable prior fiscal year period. Sales increased 11% from the $2,428,000 reported for the prior year's first quarter, and net income increased by $254,000 from the net loss of $141,000 reported for the same period a year ago. Compared to the first quarter of fiscal 2004, the company achieved higher sales primarily due to increased unit sales. On a consecutive quarter basis from the fourth quarter of fiscal 2004, sales were lower by $583,000 from a sales level of $3,290,000, due to unfulfilled Spirulina orders resulting from lower than expected production of certain Spirulina products caused by inclement weather.
The company noted that on a historical basis, its facility at Keahole Point has experienced seasonal wet weather in December through February, which is normal and is factored into the manufacturing process. However, for the period April through June 2004, the company experienced an unprecedented level of rainfall during which the facility received 383% of normal levels of rain. This resulted in a nutrient imbalance in the culture ponds, thus negatively impacting Spirulina production. Cost of production was also affected by the increased need for nutrients. This resulted in gross profit margin of 33% for the first quarter of fiscal 2005, which compares favorably to 29% reported for the prior year's first quarter and contrasts on a sequential basis to 36% reported for the fourth quarter of the prior year. Gross profit for the first quarter was $887,000, an improvement from $704,000 for the comparable prior year period.
Operating expenses for the current first quarter were $726,000, compared to $754,000 for the same period a year ago. Compared to the fourth quarter of fiscal 2004, operating expenses decreased slightly from $736,000. Correspondingly, the company reported income from operations of $161,000 for the first quarter of fiscal 2005, in contrast to the loss from operations of $50,000 recorded for the comparable period of the prior fiscal year. Other expense for the current quarter decreased by $76,000 compared to the first quarter of the prior year, primarily due to lower interest expense from lower outstanding debt.
The company's cash and cash equivalents decreased by $90,000 from the March 31, 2004 balance to $2,441,000 at June 30, 2004. Working capital increased by $191,000 from $4,083,000 at March 31, 2004 to $4,274,000 at June 30, 2004.
"While we are disappointed with the quarter's results that mark a departure from our recent trend of sequential quarterly increases in revenue and net income, we are encouraged with the progress we have made from a year ago," said Gerald R. Cysewski, Ph.D., Chairman, President and Chief Executive Officer. "Compared to the first quarter of the prior fiscal year, we have increased revenues, maintained control of our expenses and recorded net income. At the end of the first quarter of fiscal 2005, the weather-related difficulties are largely behind us and demand for our products continues to grow. Factoring out our unfulfilled Spirulina shipments, we ended the first quarter of fiscal 2005 with a 50% increase in our order backlog, compared to the beginning of the quarter. In addition, our business is generating sufficient cashflow to fund the expansion of astaxanthin production from operations. This expansion project will allow us to meet the increasing level of demand for our products, and provide additional capacity to effectively grow the company's business."
Cyanotech Corporation, a world leader in microalgal technology, produces high-value natural products from microalgae and is the world's largest commercial producer of natural astaxanthin (pronounced "asta-zan-thin") from microalgae. Products include BioAstin(R) natural astaxanthin, a powerful antioxidant with expanding applications as a human nutraceutical; NatuRose(R) natural astaxanthin for the aquaculture and animal feed industries; Spirulina Pacifica(R), a nutrient-rich dietary supplement; and phycobiliproteins, which are fluorescent pigments used in the immunological diagnostics market. Spirulina Pacifica and BioAstin are sold directly online through the Company's website, www.nutrex-hawaii.com, as well as through resellers in over 30 countries worldwide. Technical information for the Company's phycobiliproteins products is available at www.phycobiliprotein.com. Corporate data and other product information are available at www.cyanotech.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Except for statements of historical fact, the statements in this press release are forward-looking. Such statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include, but are not limited to, general economic conditions, forecasts of sales in future periods, changes in sales levels to our largest customers, weather patterns, risks associated with the acceptance of new products, competition, foreign exchange fluctuations, government regulation, and other factors more fully detailed in the Company's recent Form 10-Q and annual form 10-K filings with the Securities and Exchange Commission.