Cyanotech Reports Financial Results for Fiscal Year 2010

“Cyanotech continued solid performance increases in fiscal 2010, with steady production supporting increased demand for our products across the board,” said David I. Rosenthal, Interim President and CEO.

28 Jun 2010 --- Cyanotech Corporation, a world leader in microalgae-based, high-value nutrition and health products, announced financial results for fiscal year 2010, ended March 31, 2010.

Fiscal Year 2010
Revenues for fiscal 2010 increased 13% to $15,742,000, compared to revenues of $13,950,000 for fiscal 2009. Gross profit was $6,633,000, with gross profit margin of 42%, compared to gross profit of $5,512,000 and gross profit margin of 40% for fiscal 2009. Net income increased 22% to $1,391,000, or $0.26 per diluted share, compared to $1,142,000, or $0.22 per diluted share for fiscal 2009.

“Cyanotech continued solid performance increases in fiscal 2010, with steady production supporting increased demand for our products across the board,” said David I. Rosenthal, Interim President and CEO. “Sales of bulk, private label and our own branded packaged products for both Spirulina and natural Astaxanthin all increased. This balance speaks well for our continuing prospects going forward.”

Rosenthal noted, “Cyanotech continued to increase emphasis on higher-margin branded packaged products containing Spirulina and natural Astaxanthin in formularies for specific nutritional health benefits, as well as on expanded channels of domestic distribution. We also continued to focus on sound business fundamentals with effective cost containment and technology improvements, while restarting our clinical trial program to support future product offerings.”

Cash and cash equivalents were $817,000 at March 31, 2010 compared to the March 31, 2009 balance of $977,000. Working capital increased to $4,942,000 at March 31, 2010 compared to $3,892,000 at March 31, 2009. Inventories increased as production remained strong and Cyanotech continued to meet customers’ volume and timing demands for product. Long-term debt was significantly reduced during the year as the Company edged toward payoff of a term loan on May 1, 2010.

Revenues were divided evenly between Spirulina and natural Astaxanthin product sales. International sales were 43% of total sales for fiscal year 2010 compared to 47% for fiscal year 2009 reflecting the heightened focus on domestic marketing channels and Cyanotech’s own branded products.

Rosenthal added that Cyanotech’s growth potential is not constrained by its current production capacity, and that moving product mix to a larger percentage of branded packaged products should provide ample opportunity for sales and income growth.

Fourth Quarter Fiscal 2010
Revenues for the fourth quarter of fiscal 2010 increased 11% to $3,814,000, compared to revenues of $3,422,000 for the fourth quarter of fiscal 2009. Gross profit was $1,387,000, with gross profit margin of 36%, compared to gross profit of $1,264,000 and gross profit margin of 37% reported for the fourth quarter of fiscal 2009. Net loss was $226,000, or ($0.04) per diluted share, compared to net income of $194,000, or $0.04 per diluted share for the fourth quarter of fiscal 2009.

The fourth quarter results for fiscal 2010 include costs associated with separation of the Company’s CEO and disposal of depreciable assets no longer employed in the business, which decreased net income by $154,000 and $155,000 respectively, for a total EPS impact of $0.06 per diluted share for both the fourth quarter and year-end results.

Chief Executive Officer Update
In late February 2010, Cyanotech’s President and Chief Executive Officer was removed from his responsibilities by the Board of Directors and Mr. Rosenthal, a Director, was named Interim President and CEO. A search for a new executive officer was initiated in March 2010 and continues in process.