Cyanotech : Q4 and Fiscal Year 2022 Earnings Broadcast

Cyanotech Corporation (NASDAQ:CYAN)
Q4 and Fiscal Year 2022 Earnings Broadcast

January 23, 2022; 8:00PM EDT

Executives:

Gerry Cysewski - Chief Executive Officer Emeritus

Matthew Custer - President and Chief Executive Officer

Felicia Ladin - Chief Financial Officer

Gerry Cysewski:

Aloha from Kona, Hawaii. Thank you all for joining us today. I am Gerry Cysewski, Chief Executive Officer Emeritus of Cyanotech. Joining me on the call today is Matthew Custer, President and Chief Executive Officer and Felicia Ladin, our Chief Financial Officer. I am pleased to report Cyanotech's fourth quarter and fiscal year 2022 earnings results. I will turn the call over to Felicia to provide our forward looking statement.

Felicia Ladin:

Thanks Gerry. 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 10K fiscal year 2022 report filed with the Securities and Exchange Commission.

I will turn it back to Gerry, Gerry:

Thank you, Felicia.

After 39 years with Cyanotech, I have stepped down from my position at as Chief Executive Officer and as a member of the Board of Directors effective June 16, 2022, to have more personal time in my latter years. My time at Cyanotech has been both challenging and very rewarding. I will assume the position of CEO Emeritus and remain as the Chief Scientific Officer. I will be available for consultation on business strategy on an as needed basis. I want to sincerely thank shareholders and employees for their support throughout the years.

Matt Custer has been appointed as President and Chief Executive Officer and as a member of the Board effective June 16, 2022. Matt has been President of the Company since May 2021. Prior to his role as President, he served as the Company's Vice President, General Manager since 2019. Mr. Custer joined the Company in 2015 as Manufacturing Manager before being promoted to Director of Manufacturing in 2016. He has over twenty years of management experience in the food and supplement industries with previous experience including seven years as Plant Manager at Hamakua Macadamia Nut Company. Mr. Custer currently represents the Company as the Chairman of the Board with the Natural Algae Astaxanthin Association. He is a very talented and insightful leader, and I am confident the company is in good hands. I will turn the call over to Matt for a few comments and then discuss our results for the fiscal year.

Matthew Custer:

Thank you, Gerry. I would like to thank Gerry for his contributions to the Company which are too numerous to detail. He created a legacy at the Company for all of us to continue to uphold. I am honored and humbled to lead the organization and look forward to working with you. I will turn the call back to Gerry for comments on the fiscal year.

Gerry Cysewski

The Company had growth in fiscal year 2022. Net sales increased to $36.0 million in the fiscal year, 11.2% over the prior year, with an improved gross profit of 3.3 percentage points as a result of lower cost of spirulina due to higher production volumes and astaxanthin as a result of production efficiencies. We generated $2.4 million in cash from operations, deleveraged the balance sheet by $1.7 million and invested over $1.0 million in capital expenditures including a new enterprise reporting system.

During the year we installed two new solar power systems at our facility continuing Cyanotech's commitment to renewable energy. In addition to the 791 metric tons of carbon dioxide emissions we currently offset annually with our existing solar power system, the two new systems further reduce CO2 emissions by 163 metric tons per year.

Now I would like to turn over the call to Felicia to discuss the financials. Felicia, please?

Felicia Ladin

• In the fourth quarter this fiscal year, net sales were $8.1 million as compared to $9.4 million last year, a decrease of $1.3 million or 14%. Total sales for the fiscal year were $36.0 million as compared to $32.3 million last year, growth of $3.6 million or 11% due an increase of bulk sales of $3.4M or 37% and Nutrex sales of $407,000 or 2% over prior year. Contract services sales declined by $219,000.
• Gross profit for the fourth quarter of fiscal 2022 was $2.9 million with a gross profit margin of 35.6%, compared to a gross profit of $2.8 million and gross profit margin of 29.4% in the fourth quarter of fiscal 2021. Total gross profit for the fiscal year was $13.6 million with a gross profit margin of 37.7%, as compared to $11.1 million with a gross profit margin of 34.4%, last year. The 3.3 percentage point increase was previously discussed.
• Fourth quarter operating income was $364,000 compared to operating loss of $24,000 in the fourth quarter fiscal year 2021. For the full year, operating income was $2,574,000 compared to operating income of $84,00 in the prior fiscal year.
• Net income for the fourth quarter was $277,000, or $0.04 per diluted share, compared to a net loss of $200,000, or $0.03 per diluted share in the prior year. Net Income for the full year was $2,154,000 or $0.35 per diluted share, compared to net income of $920,000 or $0.15 per diluted share in the prior year. The prior year net income includes $1,397,000 of income related to the forgiveness of the loan under the Paycheck Protection Program.
• The company ended the current fiscal year with cash of $2.6 million and working capital of $11.4 million as compared to $3.8 million and $9.3 million, respectively as of March 31, 2021.

I will hand the call back to Gerry for concluding comments, Gerry:

Gerry Cysewski

We have not had any questions. Thank you for attending the call.

Please stay safe and healthy. Aloha