Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cyanotech Corp (CYAN, Financial) experienced a 39% increase in sales driven by bulk inventory with shorter production times.
- Revenue from contract extraction grew significantly by 156%, indicating strong demand in this segment.
- The company successfully increased work in progress inventory by $1.9 million due to mid-quarter financing.
- Sales for the first half of the fiscal year were up by 2%, showing overall growth despite quarterly challenges.
- Cyanotech Corp (CYAN) managed to increase its working capital to $550,000, up from $200,000, reflecting improved financial management.
Negative Points
- Total net sales for the second quarter decreased by 8.3% compared to the previous year.
- Gross profit margin dropped from 32.8% to 25.3%, primarily due to a higher percentage of lower-margin bulk sales.
- Operating loss increased to $975,000 from $632,000 in the same quarter of the previous year.
- Net loss for the quarter was $1.15 million, up from $0.8 million in the prior year.
- Packaged goods sales fell by 21% due to stock shortages and timing issues, impacting overall sales performance.
Q & A Highlights
Q: There was a significant drop in gross profit margin from 32.8% to 25.3%. Does this reflect higher costs or lowering sales prices or both?
A: The drop in gross profit margin was primarily driven by product mix. Due to inventory challenges, a higher percentage of sales this quarter were in bulk, which have lower profit margins. We have not made any recent changes to our selling prices. - Matthew Custer, CEO
Q: Packaged goods sales fell by 21% due to stock shortages. Was the low finished goods stock caused by ongoing supply chain issues or production issues?
A: We are not experiencing any production issues. The low inventory was driven by delays beyond our control at our co-manufacturers. - Matthew Custer, CEO
Q: Can you elaborate on the financial impact of the mid-quarter financing?
A: The mid-quarter financing allowed us to start restocking inventory, increasing work in progress inventory by $1.9 million, although finished goods were still down by $1.5 million. - Matthew Custer, CEO
Q: What were the key financial results for the second quarter of fiscal 2025?
A: Total net sales were $5.8 million, a decrease of 8.3% from the prior year. Gross profit was $1.48 million with a margin of 25.3%. Operating loss was $975,000, and net loss was $1.15 million or $0.16 per diluted share. - Jennifer Rogerson, CFO
Q: How has the company's working capital changed compared to the previous quarter?
A: Working capital increased to $550,000 from $200,000 due to higher inventories, lower accounts payable, and an amendment to a short-term loan's maturity date, reclassifying $1 million of short-term debt to long-term debt. - Jennifer Rogerson, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
