Cyanotech’s refocus hurts short-term results, but CEO expects perks in the long term

[USA] Hawaii-based Cyanotech Corp. saw its net income shift to net loss in the three months ending Dec. 31, compared to the same period the previous year.

During the past quarter, Cyanotech (Nasdaq: CYAN) reported a net loss of $250,000 or 4 cents per diluted share, compared to a net income of $463,000 or 8 cents per diluted share, in the same period the previous year.

Meanwhile, Cyanotech’s gross profit margin was 41 percent, or $3 million, compared to a gross profit margin of 50 percent in the previous year.

“The third quarter of 2016 showed the effects of our strategic refocus from a bulk ingredients business to a higher-margin consumer-focused branded business,” Brent Bailey, Cyanotech president and CEO, said in a statement. “While these efforts have negatively impacted our short-term profits, we expect them to increase our margins and profitability in the future.”

The company also saw its net sales fall by about $2 million, or 22 percent, dropping to $7.5 milliom. However, Bailey said this statistic was not a good metric for the company.

“The 22 percent decrease in net sales in the third quarter of fiscal 2016 does not accurately reflect the health of our business,” said Bailey. “Timing of revenue recognition inflated third quarter fiscal 2015 by $849,000 while reducing third quarter fiscal 2016 by $39,000. The remaining decline was primarily driven by our bulk business, due to lack of astaxanthin supply.”

The Kailua-Kona based company is a producer of nutrition and health products that use microalgae.

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