Cyanotech Reports Financial Results for the Fourth Quarter and Fiscal Year 2013

Cyanotech Reports Financial Results for the Fourth Quarter and Fiscal Year 2013

— Market Share for Both Spirulina and Astaxanthin Reaches 50% in the US Natural Products Channel in the Fourth Quarter —

KAILUA KONA, Hawaii--(BUSINESS WIRE)-- Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the fourth quarter and fiscal year 2013, ended March 31, 2013.


Fourth Quarter 2013

For the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012, net sales were $6,897,000 compared to $5,986,000, an increase of 15%. Gross profit was $2,708,000, with gross profit margin of 39%, compared to gross profit of $2,053,000 and gross profit margin of 34%. Net income was $2,633,000 or $0.47 per diluted share, compared to net income of $1,158,000 or $0.20 per diluted share. Net income in the fourth quarter includes a non-cash income tax benefit of $1,912,000 recognized on the elimination of the valuation allowance on deferred tax assets, compared to a reduction of the valuation allowance in the fourth quarter of last year of $892,000. Operating income for the quarter was $597,000 compared to $311,000 for the same quarter last year, an increase of 92%.

Regarding the 4th quarter fiscal 2013 results (changes shown versus fiscal 2012), Brent Bailey, President and CEO, stated:

"In the 4th quarter, our packaged consumer products represented more than one-half of company revenue for the first time, accounting for 52% (+14 pts.) of total net sales. Net sales growth for these products, by area, was:

  • Nutrex Mainland: +73%
  • Nutrex Hawaii: +14%
  • Nutrex Direct (online): +90%
  • Nutrex International: +203%

"Retail dollar growth in the natural products channel of our Astaxanthin products was +59% and our market share was 50% (+22 pts.). Our Spirulina retail dollar growth for the quarter was +55% and our market share was 50% (+8 pts.).

"The solid revenue growth combined with a stronger gross margin from improved Spirulina production and continued growth in Astaxanthin production, nearly doubled operating profit to $597,000 (+92%) in the 4th quarter."

Fiscal Year 2013

For fiscal 2013 compared to fiscal 2012, net sales were $27,581,000 compared to $24,631,000, an increase of 12%. Gross profit was $10,958,000, with gross profit margin of 40%, compared to gross profit of $9,774,000 and gross profit margin of 40%. Net income was $4,209,000 or $0.74 per diluted share, compared to net income of $3,632,000 or $0.66 per diluted share. Net income for the year includes a non-cash income tax benefit of $1,912,000 recognized on the elimination of the valuation allowance on deferred tax assets, compared to a reduction of the valuation allowance of $892,000 in fiscal 2012. Operating income for the year was $2,299,000 compared to $2,903,000 for fiscal 2012, a decrease of 21%.

Commenting on the fiscal 2013 results (changes shown vs. fiscal 2012), Brent Bailey noted:

"Fiscal 2013 net sales were a record $27,581,000 (+12%) and were driven by strong growth in our consumer business:

  • Nutrex Mainland: +54%
  • Nutrex Hawaii: +26%
  • Nutrex Direct (online): +81%
  • Nutrex International: +105%

"Retail dollar growth of our Astaxanthin and Spirulina products in the natural products channel was +41% and +35%, respectively, and our market share was 40% (+13 pts.) and 45% (+5 pts.), respectively. Net sales per capita of our Nutrex products in the Hawaii market reached $1.47 in fiscal 2013. Packaged products now generate 45% (+10 pts.) of our total revenue, yet utilize only 36% (+16 pts.) and 18% (+6 pts.) of our Spirulina and Astaxanthin production, respectively.

"Operating income for the year was negatively impacted by three factors:

  • Under absorbed overhead due to lower than expected Spirulina production in the first three quarters of the year.
  • The investments we are making in people, infrastructure and marketing which are driving our topline growth.
  • Increased legal fees."

About CyanotechCyanotech Corporation, a world leader in microalgae technology, produces BioAstin® Natural Astaxanthin and Hawaiian Spirulina Pacifica® — all natural, functional nutrients that leverage our experience and reputation for quality, building nutritional brands which promote health and well being. Cyanotech's Spirulina products offer complete nutrition, and augment energy and immune response. They are FDA-reviewed and accepted as Generally Recognized as Safe (GRAS) for use in food products. BioAstin's superior antioxidant activity and ability to support and maintain a natural anti-inflammatory response enhance skin, muscle and joint health. All Cyanotech products are produced from microalgae grown at our 90-acre facility in Kona, Hawaii using patented and proprietary technology. Cyanotech distributes to nutritional supplement, nutraceutical and cosmeceutical manufacturers and marketers in more than 54 countries worldwide. Cyanotech was the first microalgae company in the world to obtain quality management standards ISO 9001:2000 certification and is GMP-certified by the Natural Products AssociationTM. Visit www.cyanotech.com for more information.

"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-K for the period ended March 31, 2013. 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 AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,

 
2013 2012
(in thousands, except
share data)
ASSETS
Current assets:
Cash and cash equivalents $ 4,364 $ 5,061
Accounts receivable, net of allowance for doubtful accounts of $6 in 2013 and $16 in 2012 3,766 2,373
Inventories, net 3,688 3,548
Deferred tax assets 110 137
Prepaid expenses and other current assets 263 300
Total current assets 12,191 11,419
Equipment and leasehold improvements, net 8,835 5,834
Restricted cash 3,360
Deferred tax assets 3,429 1,307
Other assets 772 478
Total assets $ 28,587 $ 19,038
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 128 $ 234
Customer deposits 33 49
Accounts payable 1,852 1,726
Accrued expenses 872 1,352
Total current liabilities 2,885 3,361
Long-term debt, less current maturities 5,454 400
Deferred rent 21 12
Total liabilities 8,360 3,773
Commitments and contingencies
Stockholders' equity:
Common stock of $0.02 par value, authorized 50,000,000 shares; issued and outstanding 5,463,938 shares at 2013 and 5,440,968 shares at 2012 109 109
Additional paid-in capital 29,077 28,324
Accumulated deficit (8,959 ) (13,168 )
Total stockholders' equity 20,227 15,265
Total liabilities and stockholders' equity $ 28,587 $ 19,038
 
 
                     

CYANOTECH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended March 31,

 
2013 2012 2011
(in thousands, except per share data)
 
Net sales $ 27,581 $ 24,631 $ 16,827
Cost of sales 16,623 14,857 10,486
Gross profit 10,958 9,774 6,341
Operating expenses:
General and administrative 4,680 4,014 2,822
Sales and marketing 3,675 2,480 1,986
Research and development 258 320 282
Loss on disposal of equipment and leasehold improvements 46 57 22
Total operating expense 8,659 6,871 5,112
Income from operations 2,299 2,903 1,229
Other income (expense):
Loss on extinguishment of debt (51 )
Interest expense, net (60 ) (55 ) (70 )
Other income, net 5 4
Total other expense, net (111 ) (50 ) (66 )
Income before income tax benefit (expense) 2,188 2,853 1,163
Income tax benefit (expense) 2,021 779 567
Net income $ 4,209 $ 3,632 $ 1,730
Net income per share:
Basic $ 0.77 $ 0.67 $ 0.32
Diluted $ 0.74 $ 0.66 $ 0.32
Shares used in calculation of net income per share:
Basic 5,455 5,414 5,353
Diluted 5,655 5,534 5,413



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

KEYWORDS:   United States  North America  Hawaii

INDUSTRY KEYWORDS:

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