Q3 Fiscal Year 2023 Earnings Broadcast
Cyanotech Corporation (NASDAQ:CYAN)
Q3 Fiscal Year 2023 Earnings Broadcast
Friday, February 10, 2023; 8:00PM EST
Matt Custer – President and Chief Executive Officer
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:
“Sales in the third quarter of $5,891,000 improved by $712,000, or 14%, compared to second quarter sales of $5,179,000, as we saw modest improvement in consumer movement on both finished goods and bulk sales. However, both of our online finished good sales and our international bulk sales are still not performing to historical levels. On the international bulk sales, as the global supply chain issues eased, customers made adjustments to their inventory levels that impacted our sales. The inventory levels have improved but are still a headwind. We are focused on taking steps and making changes to improve these sales channels.
The cash saving initiatives that we implemented in the second quarter, including slowing production and reducing headcount, were not fully realized until late in the third quarter, due to material lead times and payment terms. However, our working capital remains strong due to higher inventories that have long expiration dates.”
Now I’d like to turn over the call to Felicia to discuss the third quarter. Felicia, please?
Thank you, Matt and good evening, everyone.
- Net sales for the third quarter of fiscal year 2023 were $5,891,000 compared to $9,459,000 for the third quarter of fiscal year 2022, a decrease of $3,568,000 or 38% due to the reasons Matt mentioned.
- Gross profit for the third quarter of fiscal year 2023 was $1,764,000 with a gross profit margin of 29.9%, compared to gross profit of $3,238,000 and gross profit margin of 34.2% in the third quarter of fiscal year 2022. Gross profit as a percent of sales for the third quarter of fiscal year 2023 decreased by 4.3 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 and lower production volumes offset slightly by a reduction in costs based on the cost savings initiatives we implemented.
- Operating loss for the third quarter was $404,000 compared to operating income of $508,000 last year reflecting a decrease of $912,000, due to decreased sales and higher costs.
- Net loss for the current quarter was $598,000, or $0.10 per diluted share, compared to net income of $386,000, or $0.06 per diluted share in the prior year.
- The Company had cash of $513,000 and working capital of $9.9 million as compared to $2.6 million and $11.4 million, respectively as of March 31, 2022.
I’ll hand the call back to Matt for concluding comments, Matt:
We had a question from shareholders and investors which we will now address.
In the Q2 filing, an operating plan to produce cash flow requirements was mentioned. Can you please discuss the plan, its current status, and any changes to the plan going forward?
We have implemented a number of cash savings initiatives starting in Q3 of the current fiscal year. We have stopped or slowed production of inventory in alignment with current customer demand, reduced headcount primarily through attrition and implemented furloughs for certain employees. We’ve also eliminated some discretionary selling, general and administrative expenses.
Thank you for attending the call. Aloha