(NASDAQ:CYAN) Q2 2012 - Record Sales, Net +66%. The Little Engine That Could.
November 17, 2011
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(NASDAQ:CYAN) Q2 2012 - The Little Engine That Could
Cyanotech again delivered impressive numbers across all metrics for Q2 ending September 30.Good job.
Since Cyanotech annoumced Q1 2012 numbers ending June 30 on August 11th Cyanotech shares have increased 48.6% ($3.95 to $5.87 as of yesterday's (11/16) close)*.
It's ALL about Superior Perceived Value.
Based on the past two quarters CYAN appears to be growing into a legitimate neutraceutical. Brent Bailey must ensure that happens and with surgical laser precision unequivocally establishing CYAN as a serious player starting with immediately distancing itself from looking like a fringe alternative health company to a major healthcare industry leader and player. Along that line, Cyanotech's Nutrex-Hawaii is suggesting a new site is pending as of November 17, 2011. I like Dr. Corish, Nutrex-Hawaii's Medical Director, but he is not doing himself any favors with the existing website. Zero credibility. Worse.
I recommend existing and prospective shareholders to look at this Youtube video of Dr. Corish on Astaxanthin. Curious this video does not prominently appear on the Nutrex-Hawaii site. Equally confounding is the fact there is no substative/any discussion of Nutrex-Hawaii on Cyanotech's main site. How could this escape CYAN management? Hopefully not a smoking gun. This would not have escaped any Fortune 500 CEO and that is EXACTLY how Brent Bailey simply must be thinking. Again, I take you to the main marketing site on Cyanotech.com. OMG it's still there!? qed. To the Cyanotech Board of Directors and Management, What are you thinking?
Nutrex-Hawaii's MD Formulas is also a winner and [should] be huge going forward. Cyanotech needs to accordingy make some strategic hire's in Sales, Operations, and R&D at the highest levels.
Building the Pipeline
Cyanotech must also get away from continually mentioning Dr. Oz accounting for their growth and establish credibility with their shareholders that CYANs growth is a result simply of a superior management team. In addition, CYAN cannot rely on Dr. Oz for their future and should be aggressively building an intellectual warchest of Ph.D entrepreneurs in establishing new products e.g. Algae Biofuel, line-extensions of existing products based on BioAstin and Hawaiin Spirulina Pacifica, and capitalizing on existing clinical studies suggesting Cyanotech’s Spirulina Pacifica® May Counter Anemia and Declining Immune Function in Persons Over Age 50 [Source: Cellular & Molecular Immunology, January 31, 2011].
The Little Engine That Could. Cyan will either become the neutra/pharmaceutical it should be and be positioned for acquisition by (NYSE:ABT) or (NYSE:BMY) or never get past single-digits per share and peak due to a mindset based on the fact CYAN has effectively not created shareholder value for approximately thirty years. There simply is lingering evidence CYAN is still being run with the mindset of a privately-held family-run vitamin store in a non-descript strip mall and may not have the bandwidth nor management depth to take it to the next step. Hopefully Dr. Chen** will have substantive influence with this.
* (Q2 Ending September 30, 2011)
"...Second Quarter 2012
For the second quarter of fiscal 2012 compared to the second quarter of fiscal 2011, revenues were $5,989,000 compared to $3,834,000. Gross profit was $2,790,000, with gross profit margin of 47%, compared to gross profit of $1,652,000 and gross profit margin of 43%. Net income was $875,000 or $0.16 per diluted share, compared to net income of $526,000 or $0.10 per diluted share.
Six Months 2012
For the first six months of fiscal 2012 compared to the first six months of fiscal 2011, revenues were $11,939,000 compared to $7,690,000. Gross profit was $4,894,000, with gross profit margin of 41%, compared to gross profit of $3,311,000 and gross profit margin of 43%. Net income was $1,361,000 or $0.25 per diluted share, compared to net income of $925,000 or $0.17 per diluted share.
Trailing 12 Months
For the trailing 12 months ended September 30, 2011, compared to the trailing 12 months ended September 30, 2010, revenues were $21,076,000 compared to revenues of $15,486,000. Gross profit was $7,924,000, with gross profit margin of 38%, compared to gross profit of $6,449,000 and gross profit margin of 42%. Net income was $2,166,000 or $0.40 per diluted share, including a non-cash tax benefit of $552,000 due to a reduction in the deferred tax valuation allowance and recording of a net deferred tax asset in the fourth quarter of fiscal 2011, compared to $1,304,000, or $0.26 per diluted share. Income before the income tax benefit was $1,623,000 compared to $1,326,000.
Commenting on the second quarter results, Brent Bailey, President and CEO, said “We’re pleased with our progress on key measures in the second quarter compared to the second quarter of fiscal 2011:Net sales reached a record $5,989,000 (+$2,155,000 and +56%)Gross margin increased to 46.6% (+3.5 pts.)Net Income grew to $875,000 (+$349,000 and +66%)Cash increased to $4,091,000 (+$3,308,000 and +422%)Inventory declined to $3,188,000 (-$1,425,000 and -31%)
In addition, our Nutrex-branded sales grew 73% and represented 37% (+3 pts.) of our net sales.”
For the second quarter of fiscal 2011, Spirulina sales accounted for 40% of total revenues and natural Astaxanthin sales for 60%. International sales were 27% of total sales..." Source: Cyanotech.
** Thomas F. Chen named to CYAN's Board of Directors. Cyanotech Files SEC Form 8-K.
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