Q2 Fiscal Year 2023 Earnings Broadcast
Matt Custer – President and Chief Executive Office
Felicia Ladin – Chief Financial Officer
Aloha from Kona, Hawaii. Thank you all for joining us today. I am Matt Custer, President and Chief Executive Officer of Cyanotech. Joining me on the call today is Felicia Ladin, our Chief Financial Officer. I will turn the call over to Felicia to provide our forward looking statement.
Thanks Matt. Our discussion today may include forward-looking statements. We do not undertake any obligation to update forward-looking statements either as a result of new information, future events or otherwise. Our actual results may differ materially from what is described in these forward-looking statements. Some of the factors that may cause results to differ are listed in our publicly filed documents. For additional information, we encourage you to review our 10Q and fiscal year 2022 10K report filed with the Securities and Exchange Commission.
I will turn it back to Matt for comments on the quarter, Matt:
Q2-23 was a disappointing quarter. Our net sales of $5,179,000 were lower than second quarter in fiscal year 2022 by 45% due to a confluence of events including the increased US dollar exchange rate affecting international sales, lower sales in the bulk business, primarily in Asia, due in part to inventory adjustments after the global supply chain issues eased and sales in the e-commerce business due to timing of orders. Consumer movement this quarter is not fully reflected in the retail numbers because of these drivers.
Our manufacturing operations were steady and on course, with consistent Spirulina and record Astaxanthin cultivation.
The reduction in sales reduced working capital by only $354,000, with an increase in debt of $239,000 compared to the same quarter in the prior fiscal year. We did draw $1.3M on our revolver from First Foundation Bank.
The company has been through challenging times before that have provided a roadmap to reduce our spend, control our inventory, and protect our working capital. As sales slowed, we took steps to address our cost structure and we are also initiating renewed focus on our sales and marketing function. These steps, I believe, will position us for success when our sales normalize.”
Now I would like to turn over the call to Felicia to discuss the second quarter. Felicia, please?
Thank you, Matt and good evening, everyone.
- As Matt said net sales for the second quarter of fiscal 2023 were $5,179,000 compared to $9,419,000 for the second quarter of fiscal 2022.
- Gross profit for the second quarter of fiscal 2023 was $1,790,000, with a gross profit margin of 34.6%, compared to gross profit of $3,762,000 and gross profit margin of 39.9% in the second quarter of fiscal 2022. Gross profit as a percent of net sales for the second quarter of fiscal 2023 decreased by 5.3 percentage points compared to the same period last year, as a result of higher costs per kilogram of astaxanthin and spirulina due to the impact of inflation on our underlying costs.
- Operating loss for the second quarter was $837,000 compared to operating income of $1,082,000 last year reflecting a decrease of $1,919,000 due to decreased sales and higher costs.
- Net loss for the current quarter was $940,000, or $0.15 per diluted share, compared to net income of $970,000, or $0.16 per diluted share in the prior year.
- Company had cash of $379,000 and working capital of $10.4 million as compared to $2.6 million and $11.4 million, respectively as of March 31, 2022.
I will hand the call back to Matt for concluding comments, Matt:
We have not had any questions. Thank you for attending the call.