The Kailua Kona-based company, which produces both astaxanthin and spirulina in open ponds in an oceanside production facility, reported a significant drop in sales in its first quarter fiscal 2023. Cyanotech sells its astaxanthin as a finished product, and sales were impacted by a switchover to a new selling platform on the part of a major customer, which shows the vulnerability of being a smaller company with a limited list of retail partners.
Customer issues, staff shortages
“The disappointing results in the first quarter were driven primarily by the $2.2 million decrease in sales and a higher cost per kilo of astaxanthin. Lower sales in the quarter related to timing of shipments to a Nutrex customer as we transitioned to their selling platform in the prior year, as well as a decrease in bulk spirulina sales,” said Cyanotech CEO Matthew Custer.
In addition, Cyanotech was impacted by something that has affected businesses of all types across the nation, that being the increasing uncertainty of being able to attract and keep employees.
“The increase in cost for astaxanthin was driven by lower production in the first quarter due to staff shortages. Production levels normalized late in the first quarter,” Custer said.
Earnings details
Cyanotech reported net sales of $6.7 million for the first quarter of fiscal 2023 compared to $9 million for the first quarter of fiscal 2022, a decrease of 25.1%. Gross profit was $2.3 million, with a gross profit margin of 34.5%, compared to gross profit of $3.7 million with gross profit margin of 41.0%. Operating loss for the first quarter of fiscal 2023 was $425,000 compared to operating income of $619,000 in the same period of the prior year. Net loss for the current fiscal quarter was $472,000, or $0.08 per diluted share, compared to net income of $520,000, or $0.08 per diluted share, for the same period of the prior year.
In recent years Cyanotech’s stock price has fluctuated from a high of more than $5 a share in 2018 to briefly dropping below $2 a share in 2020. Shares are trading at about $2.70 today.
