Cyanotech third quarter revenues decrease to $3,919,000

Cyanotech Corporation (Nasdaq Capital Market: CYAN), a world leader in microalgae-based, high-value nutrition and health products, today announced financial results for the third quarter and first nine months of fiscal 2011, ended December 31, 2010.

“Trends of our new marketing initiatives continued to improve in the third quarter of fiscal 2011, although overall sales were down 2%”

Third Quarter 2011

For the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, revenues were $3,919,000 compared to revenues of $3,982,000. Gross profit was $1,232,000, with gross profit margin of 31%, compared to gross profit of $1,750,000 and gross profit margin of 44%. Net income was $10,000, or $0.00 per diluted share, compared to $605,000, or $0.11 per diluted share.

Trailing 12 Months

For the trailing 12 months ended December 31, 2010, compared to the trailing 12 months ended December 31, 2009, revenues were $15,423,000 compared to revenues of $15,350,000. Gross profit was $5,931,000, with gross profit margin of 38%, compared to gross profit of $6,509,000 and gross profit margin of 42%. Net income was $709,000, or $0.14 per diluted share, compared to $1,811,000, or $0.35 per diluted share.

"Trends of our new marketing initiatives continued to improve in the third quarter of fiscal 2011, although overall sales were down 2%," said Brent Bailey, President and CEO. "Sales of Cyanotech's branded, higher-margin packaged products, a core initiative, increased 25% for Spirulina and 40% for natural Astaxanthin, offset by lower private label sales for both products. Marketing and sales expense increased by 49% from the third quarter of fiscal 2010 to support new brokers and broker training as well as new marketing programs for packaged products."

"Our third quarter fiscal 2011 production was well below the same period in fiscal 2010 due to several factors including rain events and the subsequent recovery time to normal production levels," Bailey added. "These factors were the primary driver of our margin decline for the quarter and are not expected to continue."

"Cyanotech makes products that can favorably impact many of our most significant global health issues. Spirulina is nutrition in its most concentrated form and natural Astaxanthin is the world's most powerful known natural antioxidant. In my opinion, these two products are the best kept secret in the nutritional supplement industry. We intend to change that and build them to their full potential," noted Bailey.

Cash and cash equivalents were $729,000 at December 31, 2010 compared to the March 31, 2010 balance of $817,000. Working capital was $5,944,000 at December 31, 2010 compared to $4,942,000 at March 31, 2010.

For the third quarter of fiscal 2011 compared to the third quarter of fiscal 2010, Spirulina sales accounted for 46% of total revenues and natural Astaxanthin sales for 54%. International sales were 44% of total sales.

First Nine Months 2011

For the first Nine months of fiscal 2011 compared to the first nine months of fiscal 2010, revenues were $11,609,000 compared to revenues of $11,928,000. Gross profit was $4,543,000, with gross profit margin of 39%, compared to gross profit of $5,245,000 and gross profit margin of 44%. Net income was $935,000, or $0.17 per diluted share, compared to $1,617,000, or $0.30 per diluted share.