Cyanotech Corporation (NASDAQ:CYAN)
Q2 Fiscal Year 2024 Earnings Broadcast
November 9, 2023; 8:00PM EDT
Matt Custer – President and Chief Executive Officer
Felicia Ladin – Chief Financial Officer
Aloha from Kona, Hawaii. Thank you 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 2023 10K report filed with the Securities and Exchange Commission.
I will turn it back to Matt for comments on the quarter,
The sales in the quarter are trending in the right direction with a 23.1% increase versus prior year. We generated cash flow from operations in the quarter of $0.8 million as we manage our spend in line with customer demand.
We continue to focus on driving demand in the naturally derived algae space with existing and new customers as they prioritize transparency and sustainability in functional health. Our naturally farmed microalgae from our location in Hawaii with pristine waters and natural sourcing practices aligns with rising consumer objectives and growing demand for responsible, sustainable products.
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.
- Net sales for the second quarter of fiscal 2024 were $6,373,000 compared to $5,179,000 for the second quarter of fiscal 2023. As Matt mentioned, this is a 23.1% increase over prior year.
- Gross profit for the second quarter of fiscal 2024 was $2,088,000, with a gross profit margin of 32.8%, compared to gross profit of $1,790,000 and gross profit margin of 34.6% in the second quarter of fiscal 2023. Gross profit as a percent of net sales for the second quarter of fiscal 2024 was lower by 1.8 percentage points compared to the same period last year, as a result of higher costs related to lower production volumes aligning with lower sales.
- The second quarter operating loss of $632,000 was $205,000 lower than prior year operating loss of $837,000 reflecting higher sales in the current fiscal quarter.
- Net loss for the current quarter was $797,000, or $0.13 per diluted share, compared to net loss of $940,000, or $0.15 per diluted share in the prior year.
- Company had cash of $1,236,000 and working capital of $4.0 million as compared to $1.0 million and $5.4 million, respectively as of March 31, 2023. Lower working capital is attributed to predominately due to lower inventory as we are managing purchases and production in line with customer demand.
I will hand the call back to Matt to answer a few investor questions, Matt:
We received two questions this quarter:
Question 1: Is there a strategy to try to expand distribution channels for Astaxanthin and BioAstin?
Response: In August the company created the new position of Chief Commercial Officer and was pleased to hire Collette Kakuk to assume that position.
In her role Collette is focused on improving the marketing, presentation and sales within the extensive channels where we are already active. Look for new and clearer messaging, both text and image, in our public facing materials, online and in store.
Additionally, she is exploring potential opportunities in the pet food and supplement space.
Question 2: How likely is it that we will have to have a reverse split of our stock to maintain NASDAQ listing?
Response: The Company is evaluating all options in the best interest of the shareholders.
Thank you for attending the call. Aloha