Cyanotech Reports Financial Results For The Third Quarter And First Nine Months Of Fiscal 2011

Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the third quarter and first nine months of fiscal 2011, ended December 31, 2010.

Third Quarter 2011

For the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, revenues were $3,919,000 compared to revenues of $3,982,000. Gross profit was $1,232,000, with gross profit margin of 31%, compared to gross profit of $1,750,000 and gross profit margin of 44%. Net income was $10,000, or $0.00 per diluted share, compared to $605,000, or $0.11 per diluted share.

Trailing 12 Months

For the trailing 12 months ended December 31, 2010, compared to the trailing 12 months ended December 31, 2009, revenues were $15,423,000 compared to revenues of $15,350,000. Gross profit was $5,931,000, with gross profit margin of 38%, compared to gross profit of $6,509,000 and gross profit margin of 42%. Net income was $709,000, or $0.14 per diluted share, compared to $1,811,000, or $0.35 per diluted share.

“Trends of our new marketing initiatives continued to improve in the third quarter of fiscal 2011, although overall sales were down 2%,” said Brent Bailey, President and CEO. “Sales of Cyanotech’s branded, higher-margin packaged products, a core initiative, increased 25% for Spirulina and 40% for natural Astaxanthin, offset by lower private label sales for both products. Marketing and sales expense increased by 49% from the third quarter of fiscal 2010 to support new brokers and broker training as well as new marketing programs for packaged products.”

“Our third quarter fiscal 2011 production was well below the same period in fiscal 2010 due to several factors including rain events and the subsequent recovery time to normal production levels,” Bailey added. “These factors were the primary driver of our margin decline for the quarter and are not expected to continue.”

“Cyanotech makes products that can favorably impact many of our most significant global health issues. Spirulina is nutrition in its most concentrated form and natural Astaxanthin is the world’s most powerful known natural antioxidant. In my opinion, these two products are the best kept secret in the nutritional supplement industry. We intend to change that and build them to their full potential,” noted Bailey.

Cash and cash equivalents were $729,000 at December 31, 2010 compared to the March 31, 2010 balance of $817,000. Working capital was $5,944,000 at December 31, 2010 compared to $4,942,000 at March 31, 2010.

For the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, Spirulina sales accounted for 46% of total revenues and natural Astaxanthin sales for 54%. International sales were 44% of total sales.

First Nine Months 2011

For the first Nine months of fiscal 2011 compared to the first nine months of fiscal 2010, revenues were $11,609,000 compared to revenues of $11,928,000. Gross profit was $4,543,000, with gross profit margin of 39%, compared to gross profit of $5,245,000 and gross profit margin of 44%. Net income was $935,000, or $0.17 per diluted share, compared to $1,617,000, or $0.30 per diluted share.

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 its 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 Association TM . 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 recent Form 10-Q and 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-Q for the period ended December 31, 2010. As such the following Financial Tables are provided only as a guide and other factors are more fully detailed in the Company’s Form 10-Q and annual Form 10-K filings with the Securities and Exchange Commission.)
CYANOTECH CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
 
(Dollars in thousands except par value and number of shares)
(Unaudited)
   
December 31,2010 March 31,2010
ASSETS
Current assets:
Cash and cash equivalents $ 729 $ 817
Accounts receivable, net of allowance for doubtful accounts of $10 at December 31, 2010 and March 31, 2010 2,660 2,064
Inventories, net 4,356 3,933
Prepaid expenses and other assets 168 400
Total current assets 7,913 7,214
 
Equipment and leasehold improvements, net 4,658 4,681
Other assets 287 253
Total assets $ 12,858 $ 12,148
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt $ 202 $ 276
Line of credit 150
Customer deposits 48
Accounts payable 984 1,125
Accrued expenses 735 721
Total current liabilities 1,969 2,272
 
Long-term debt, less current maturities 605 756
Total liabilities 2,574 3,028
 
Commitments and contingencies
 
Stockholders’ equity:

Common stock of $0.02 par value, shares authorized 7,500,000; 5,391,968 shares issued and outstanding at December 31, 2010 and 5,252,572 shares at March 31, 2010
108 105
Additional paid-in capital 27,771 27,545
Accumulated deficit (17,595 ) (18,530 )
Total stockholders’ equity 10,284 9,120
 
Total liabilities and stockholders’ equity $ 12,858 $ 12,148
 
 
CYANOTECH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 
(Dollars in thousands, except per share amounts)
(Unaudited)
     
Three Months EndedDecember 31, Nine Months EndedDecember 31,
2010   2009 2010   2009
 
NET SALES $ 3,919 $ 3,982 $ 11,609 $   11,928
COST OF PRODUCT SALES 2,687 2,232 7,066 6,683
Gross profit 1,232 1,750 4,543 5,245
 
OPERATING EXPENSES:
General and administrative 630 716 2,036 2,390
Sales and marketing 502 336 1,278 961
Research and development 83 66 229 188
Total operating expenses 1,215 1,118 3,543 3,539
 
Income from operations 17 632 1,000 1,706
 
OTHER INCOME (EXPENSE):
Interest expense, net (16 ) (26 ) (54 ) (83 )
Other income, net 6 23
 
Total other expense, net (16 ) (20 ) (54 ) (60 )
 
Income before provision for (benefit from ) income taxes 1 612 946 1,646
 
PROVISION FOR (BENEFIT FROM) INCOME TAXES (9 ) 7 11 29
 
NET INCOME $ 10 $ 605 $ 935 $ 1,617
 
NET INCOME PER SHARE:
Basic $ .00 $ .12 $ .18 $ .31
Diluted $ .00 $ .11 $ .17 $ .30
 
SHARES USED IN CALCULATION OF NET INCOME PER SHARE:
Basic 5,392 5,249 5,340 5,247
Diluted 5,423 5,403 5,366 5,317

Copyright Business Wire 2010

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