Cyanotech Corporation (CYAN) Earnings Call Transcript & Summary

Aloha from Kona, Hawaii. Thank you all for joining us today. I'm 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.

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 10-K 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 as Cyanotech's Chief Executive Officer and as a member of the Board of Directors effective June 16, 2022, to have more personal time in my later 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, and I want to sincerely thank shareholders and employees for their support throughout the years. Matt Custer has been appointed 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 a Manufacturing Manager before being promoted to Director of Manufacturing in 2016. He has over 20 years of management experience in the food and supplement industries with previous experience, including 7 years, as Plant Manager at Hamakua Macadamia Nut Company. Mr. Custer currently represents the company as Chairman of the Board with the Natural Algae Astaxanthin Association. He is a very talented and insightful leader, and I'm 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.

Thank you, Gerry. I'd 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'm 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.

The company had growth in fiscal year 2022. Net sales increased to $36 million over the fiscal year, 11.2% over the prior year and 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 million in capital expenditures, including a new enterprise reporting system. During the year, we installed 2 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 2 new systems will further reduce CO2 emissions by 163 metric tons per year. Now I would like to turn it over to Felicia to discuss the financial results. Felicia, please?

In the fourth quarter of 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 million as compared to $32.3 million last year, growth of $3.6 million or 11% due to an increase of bulk sales of $3.4 million 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 gross profit of $2.8 million and a 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 an operating loss of $24,000 in the fourth quarter of fiscal year 2021. For the full year, operating income was $2.574 million compared to operating income of $84,000 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 million or $0.35 per diluted share compared to net income of $920,000 or $0.15 per diluted share last year. The prior year net income includes $1.397 million 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?

We have not had any questions. Thank you all for attending the call. Please stay safe and healthy. Aloha.