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Cyanotech: 13.7% sales dip in 2nd quarter, rebound expected

November 14, 2018
AlgaeIndustryMagazine.com

Cyanotech produces spirulina and astaxanthin products at their 90-acre facility on the Kailua-Kona Coast of Hawaii.

Hawaii-based algal nutrition company Cyanotech Corporation has announced financial results for the second quarter and first six months of fiscal year 2019, ended September 30, 2018.

For the second quarter of fiscal 2019 compared to the second quarter of fiscal 2018, net sales were $6,954,000 compared to $8,055,000. Gross profit was $2,285,000, with gross profit margin of 32.9%, compared to gross profit of $3,620,000 and gross profit margin of 44.9%. Operating loss was ($1,004,000) compared to operating income of $619,000. Net loss was ($1,136,000) or ($0.20) per diluted share, compared to net income of $475,000 or $0.08 per diluted share.

Commenting on the second quarter and first six months results (changes shown vs. same period of fiscal 2018), Cyanotech’s Chief Executive Officer, Mawae Morton, said, “The re-inoculation we initiated in the first quarter of this fiscal year continued to restrict supply in the second quarter, which in turn significantly reduced our net sales and gross profit margin. In addition to a 13.7% decrease in sales volume, the lower production levels resulted in a $0.6 million increase in costs for the current quarter, and reduced gross margin by 9.3 points.

“We have returned to mostly normal production levels for spirulina, and as a result, the re-inoculation should not continue to have significant negative impacts on our financial results in future quarters. Demand for spirulina remains high, and at September 30 we had a large number of open spirulina orders for both Nutrex Hawaii products and Cyanotech bulk material.

“Astaxanthin sales for the quarter were 0.2% higher than last year, and at the end of the quarter we had orders of $0.8 million that were still in transit to customers, compared to $0.1 million in transit at September 30, 2017. These orders will be recognized as revenue upon delivery in October 2018 and fall into our third quarter results.

“Sales to Costco were up 2% and sales to Amazon were up 35% in the second quarter compared to the second quarter of fiscal 2018, reflecting continued growth with these key customers. We continued to invest in these relationships, for example, by joining Amazon as a premium sponsor during the Kona World Championship Ironman Race.”

For the first six months ended September 30, 2018 compared to the first six months ended September 30, 2017, net sales were $14,099,000 compared to $16,864,000. Gross profit was $4,121,000, with gross profit margin of 29.2%, compared to $7,223,000 and 42.8%. Net loss was ($2,411,000) or ($0.42) per diluted share, compared to net income of $977,000 or $0.17 per diluted share.

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