KAILUA KONA, Hawaii, Nov 03, 2005 (BUSINESS WIRE) -- Cyanotech Corporation (CYAN), a world leader in producing high-value nutrition and health products from microalgae, today announced financial results for the second quarter of its fiscal year 2006, ended September 30, 2005.
Sales for the second quarter of fiscal 2006 were $2,517,000, a decrease of 16% and 17% compared to sales of $2,998,000 for the same period of the prior fiscal year and $3,029,000 for the prior sequential quarter, respectively. The decrease in sales resulted from lower order levels for Spirulina Pacifica(R) products and reduced demand for NatuRose(R) from the Japanese aquaculture market, offset in part by slightly higher sales of BioAstin(R) natural astaxanthin for the human nutritional supplement market.
Gross profit for the second quarter of fiscal 2006 was $581,000, with gross profit margin of 23%, compared to a gross profit of $1,054,000 and gross profit margin of 35% reported for the same quarter of the prior year. Gross profit and gross profit margin for the quarter ended September 30, 2005 were impacted by higher per unit natural astaxanthin production costs due to the Company's decision to reduce production in response to overall order levels.
Net loss for the second quarter was $321,000, or ($0.02) per diluted share, compared to net income of $121,000, or $0.01 per diluted share for the same quarter of the prior year and net income of $153,000, or $0.01 per diluted share for the prior sequential quarter.
"Our lower overall revenue during the second quarter of fiscal 2006 was due largely to fluctuation in the ordering pattern of our spirulina customers as well as to reduced orders for NatuRose from the Sea Bream market in Japan," said Cyanotech's Chairman, President and Chief Executive Officer, Gerald R. Cysewski. "As a consequence of the present state of the Japan aquaculture market we are expanding into other areas such as tropical fish. There are also studies underway to determine the potential of NatuRose for decreasing mortality and improving absorption of food by young fish. Such economic benefits for the aquaculture market would expand NatuRose's value beyond pigment enhancement.
"Despite lower order levels from our two largest BioAstin customers, sales of BioAstin increased overall reflecting our new wholesale, business-to-business marketing focus," Dr. Cysewski continued. "Our BioAstin natural astaxanthin is an ingredient in health formulations from nearly 40 manufacturers, with customers such as Now Foods, Health Plus, Twin Laboratories and Jarrow Formulas, among others." Dr. Cysewski added further, "We have launched a new corporate website with additional information thereby increasing the effectiveness of our marketing activity."
For the first six months of fiscal 2006 the Company reported sales of $5,546,000, a slight decrease from sales of $5,705,000 reported for the comparable period of the prior fiscal year. Gross profit for the first six months of fiscal 2006 was $1,606,000 with gross profit margin of 29%, compared to gross profit of $1,941,000 and gross profit margin of 34% for the comparable period of the prior fiscal year. Gross profit and gross profit margin were impacted by higher per unit natural astaxanthin production costs due to the Company's decision to reduce production in response to market conditions. For the first six months of fiscal 2006 the Company reported a net loss of $168,000, or ($0.01) per diluted share compared to net income of $234,000, or $0.01 per diluted share reported for the comparable period of the prior fiscal year.
The Company's cash and cash equivalents increased to $2,054,000 from the March 31, 2005 balance of $2,005,000. Working capital remained adequate, increasing $210,000 from $5,102,000 at March 31, 2005 to $5,312,000 at September 30, 2005.
Cyanotech Corporation, the world leader in microalgae technology, produces BioAstin(R) Natural Astaxanthin and Hawaiian Spirulina Pacifica(R) -- all natural, functional nutrients that enhance human health and nutrition, providing significant antioxidant, anti-inflammatory and immune response benefits. NatuRose(R) Natural Astaxanthin is a natural pigment source that also promotes animal health and nutrition, primarily in aquaculture. Phycobiliproteins are fluorescent pigments used in medical diagnostic testing and research. Cyanotech produces these products from microalgae grown at its 90-acre facility in Hawaii using patented and proprietary technology and distributes them to nutritional supplement, nutraceutical, cosmeceutical, and animal feed makers and marketers in more than 30 countries worldwide. Cyanotech was the first microalgae company in the world to obtain ISO 9001:2000 certification. Corporate data and 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, production problems caused by contamination, 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.
Cyanotech Corporation will hold a conference call on Thursday, November 3, 2005 at 5:30 p.m. Eastern Time to be broadcast live over the Internet. It can be accessed by linking through the Investor Broadcast Network's VCall website at www.vcall.com or through Cyanotech's website, http://www.cyanotech.com. To access the simultaneous webcast, please go to either website at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call and will be archived for a period of one calendar year.