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June 19, 2018
AlgaeIndustryMagazine.com

Cyanotech’s open pond algae cultivation in Hawaii.

Microalgae-based, high-value nutrition and health products manufacturer Cyanotech Corp., of Kailua Kona, Hawaii, has announced financial results for the fourth quarter and fiscal year 2018, ended March 31, 2018.

For fiscal year 2018 compared to fiscal year 2017, net sales improved to $34,115,000 compared to $32,042,000. Gross profit increased to $13,371,000, with gross profit margin of 39.2%, compared to gross profit of $12,224,000 and gross profit margin of 38.1%. Operating income improved to $1,414,000 compared to an operating loss of ($682,000). Net income was $1,025,000 or $0.18 per diluted share, compared to net loss of ($1,215,000) or ($0.21) per diluted share.

Commenting on the fiscal year 2018 results (changes shown vs. fiscal year 2017), Cyanotech’s Chief Executive Officer Mawae Morton said, “Cyanotech results for the year continue to reflect our focus on building our consumer brands, introducing them to a broader consumer market and maintaining a profitable mix of sales channels. Despite the spirulina production issues we experienced in the fourth quarter, this strategy enabled us to deliver positive top line and bottom line performance over the past fiscal year.

“The net sales increase of 6.5% was driven by a 13.6% increase in sales of our packaged Nutrex Hawaii products, offset by a 23.3% decrease in bulk sales. The increase in packaged sales for both astaxanthin and spirulina was the result of continued growth in sales through Costco and Amazon. The bulk sales decrease is primarily from a 29.8% decrease in bulk spirulina sales, related to production declines we experienced during the year. Demand for our spirulina remains high.

“Operating expenses decreased $0.9 million, or 5.3% of net sales, to $12.0 million, due to a $1.5 million decrease in legal fees, offset by an increase in compensation and incentive costs. As a result, net income was $1.0 million, or 3.0% of net sales, compared to a net loss of $1.2 million, or (3.8%) of net sales, an overall increase of $2.2 million compared with last year.”

Commenting on production, Gerald R. Cysewski, Ph.D., Cyanotech’s founder and Chief Scientific Officer, said, “Our unique and intricate agricultural systems, in which we grow microalgae year-round in open ponds, require favorable weather conditions and proper control and balance of nutrients to achieve optimum production.

“Our fourth quarter was significantly impacted by a variety of unexpected events, which occurred in concert to have an adverse effect on our production of spirulina. These events included fresh water supply restriction which lasted several months, and an unusually cool, cloudy and rainy winter, which lead to the growth of small and difficult to harvest spirulina.

“In response to these production challenges, at the beginning of April 2018 we undertook a re-inoculation of our spirulina ponds which we believe will allow us to correct the nutrient levels and stabilize production. There was no spirulina production during the re-inoculation process, which was completed in mid-May 2018.”

For the fourth quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017, net sales were $8,101,000 compared to $7,253,000. Gross profit was $1,908,000, with gross profit margin of 23.6%, compared to $2,661,000 and 36.7%. Operating loss was ($935,000) compared to ($146,000). Net loss was ($1,058,000) or ($0.18) per diluted share, compared to net loss of ($274,000) or ($0.05) per diluted share.

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