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Cyanotech Reports Financial Results for the Third Quarter and First Nine Months of Fiscal 2021

Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, announced financial results for the third quarter and first nine months of fiscal year 2021, ended December 31, 2020.

Cyanotech’s Chief Executive Officer, Gerald R. Cysewski, Ph.D., said: “Our current quarter results were affected by the timing of product received by customers from our carriers, as well as lower gross profit due to the sale of higher cost inventory. Our e-commerce sales continue to perform well as consumers' shopping preferences have shifted.”

Third Quarter Fiscal 2021

Cyanotech reported net sales of $6,985,000 for the third quarter of fiscal 2021 compared to $7,504,000 for the third quarter of fiscal 2020. Overall sales were lower by $519,000, or 6.9%, due to the timing of shipments received by customers. Gross profit was $2,071,000, with gross profit margin of 29.6%, compared to gross profit of $2,877,000 and gross profit margin of 38.3%. Gross profit for the quarter decreased by 8.7 percentage points due to the sale of higher cost astaxanthin inventory from the prior year and current year higher spirulina costs per kilo driven by lower production. Operating loss for the third quarter of fiscal 2021 was ($441,000) compared to operating income of $367,000 in the third quarter of the prior year.

Net income was $827,000, or $0.13 per diluted share, compared to a net income of $171,000, or $0.03 per diluted share, with the increase primarily due to the forgiveness of the loan under the Paycheck Protection Program in the amount of $1,389,000, including accrued interest of $8,000.

Nine Months Fiscal 2021

For the nine months ended December 31, 2020, Cyanotech reported net sales of $22,907,000 compared to $23,265,000 for the same period in fiscal 2020. Gross profit was $8,347,000, with gross profit margin of 36.4%, compared to gross profit of $9,615,000 and gross profit margin of 41.3%. Operating income was $109,000 compared to $825,000 in the prior year. Net income was $1,121,000, or $0.18 per diluted share, compared to a net income of $266,000, or $0.04 per diluted share.

Trailing Twelve Months

For the trailing twelve months ended December 31, 2020, compared to the trailing twelve months ended December 31, 2019, net sales were $31,541,000 compared to $29,323,000. Gross profit was $11,431,000, with gross profit margin of 36.2%, compared to $11,844,000 and 40.4%. Net income was $1,242,000, or $0.20 per diluted share, compared to net loss of ($1,297,000), or ($0.22) per diluted share.

Please review the Company’s Form 10-Q for the period ended December 31, 2020 for more detailed information.

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— Cyanotech will host a virtual broadcast at 8:00 PM EST on Friday, February 12, 2021 to respond to questions about its operating results and other topics of interest. Interested parties are asked to submit questions to questions@cyanotech.com before 12 p.m. (noon) EST on Friday, February 12, 2021. The Company will respond only to relevant questions relating to the Company’s third quarter fiscal 2021 financial performance and will not be accepting any questions or comments during the broadcast.

To join the broadcast, please browse http://cyanotech.com/meet approximately five minutes prior to the start time.

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About Cyanotech — Cyanotech Corporation, a world leader in microalgae technology for more than 30 years, produces BioAstin® Hawaiian Astaxanthin® and Hawaiian Spirulina Pacifica®. These all-natural, dietary ingredients and supplements leverage our experience and reputation for quality, building nutritional brands which promote health and well-being. The Company’s mission is to fulfill the promise of whole health through Hawaiian microalgae. Cyanotech’s BioAstin® offers superior antioxidant activity which supports skin, eye and joint health, as well as recovery from exercise*. Cyanotech's Spirulina products offer nutrition that supports cardiovascular health and immunity*. All Cyanotech products are produced from microalgae grown at our 96-acre facility in Kona, Hawaii using patented and proprietary technology and are Generally Recognized as Safe (“GRAS”) for use in food products. Cyanotech sells its products direct to consumers at retail locations in the United States and online at www.nutrex-hawaii.com and also distributes to dietary supplement, nutraceutical and cosmeceutical manufacturers and marketers. The Company is regulated by the Food and Drug Administration. Visit www.cyanotech.com for more information.

*These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

“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-Q for the third quarter fiscal 2021 ended December 31, 2020, which can be found on the Cyanotech website (www.cyanotech.com) under Investors>Investor Filings upon filing. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)

  

December 31,
2020

 

March 31,
2020

ASSETS

 

Current assets:

 

Cash

$

3,322

 

$

2,417

Accounts receivable, net of allowance for doubtful accounts of $31 at December 31, 2020 and $13 at March 31, 2020

1,682

 

2,154

Inventories, net

9,589

 

9,653

Prepaid expenses and other current assets

430

 

504

Total current assets

15,023

 

14,728

 

Equipment and leasehold improvements, net

12,363

 

13,042

Operating lease right-of-use assets, net

3,598

 

3,834

Other assets

129

 

183

Total assets

$

31,113

 

$

31,787

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

Accounts payable

$

1,550

 

$

2,137

Accrued expenses

701

 

849

Customer deposits

116

 

327

Operating lease obligations, current portion

338

 

319

Short-term contract obligation

 

38

Line of credit

1,750

 

2,000

Current maturities of long-term debt

2,204

 

689

Total current liabilities

6,659

 

6,359

 

Long-term debt, less current maturities

3,998

 

6,009

Long-term operating lease obligations

3,265

 

3,519

Other long-term liabilities

34

 

54

Total liabilities

13,956

 

15,941

 

Commitments and contingencies

 

 

Stockholders’ equity:

 

Preferred stock of $0.01 par value, authorized 10,000,000 shares; no shares issued and outstanding

 

Common stock of $0.02 par value, authorized 50,000,000 shares; issued and outstanding 6,097,073 shares at December 31, 2020 and
6,011,885 shares at March 31, 2020

122

 

120

Additional paid-in capital

33,182

 

32,994

Accumulated deficit

(16,147

)

 

(17,268

)

Total stockholders’ equity

17,157

 

15,846

Total liabilities and stockholders’ equity

$

31,113

 

$

31,787

CYANOTECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

  

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

2020

2019

 

2020

2019

 

Net sales

$

6,985

$

7,504

 

$

22,907

$

23,265

Cost of sales

4,914

4,627

 

14,560

13,650

Gross profit

2,071

2,877

 

8,347

9,615

 

Operating expenses:

 

General and administrative

1,001

958

 

3,801

4,146

Sales and marketing

1,300

1,406

 

3,918

4,157

Research and development

211

146

 

519

487

Total operating expenses

2,512

2,510

 

8,238

8,790

 

(Loss) income from operations

(441

)

367

 

109

825

 

Interest expense, net

(123

)

(164

)

 

(374

)

(530

)

Gain on extinguishment of debt

1,389

 

1,389

 

Income before income taxes

825

203

 

1,124

295

 

Income tax (benefit) expense

(2

)

32

 

3

29

 

Net income

$

827

$

171

 

$

1,121

$

266

 

Net income per share:

 

Basic

$

0.14

$

0.03

 

$

0.18

$

0.04

Diluted

$

0.13

$

0.03

 

$

0.18

$

0.04

 

Shares used in calculation of net income per share:

 

Basic

6,097

5,957

 

6,060

5,946

Diluted

6,222

5,962

 

6,169

5,949

Contacts:

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

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