Earnings Call Transcript - CYAN Q1 2024

Matthew Custer, President and Chief Executive Officer

Aloha from Kona, Hawaii. Thank you all for joining us today to report Cyanotech's First Quarter Fiscal Year 2024 Earnings Results. I am Matt Custer, President and Chief Executive Officer of Cyanotech. Joining me on the call today is Felicia Ladin, our Chief Financial Officer. I will turn the call over to Felicia to provide our forward-looking statement.

Felicia Ladin, Chief Financial Officer

Thanks, Matt. Our discussion today may include forward-looking statements. We do not undertake any obligation to update forward-looking statements, either as a result of new information, future events or otherwise. Our actual results may differ materially from what is described in these forward-looking statements. Some of the factors that may cause results to differ are listed in our publicly filed documents. For additional information, we encourage you to review our 10-Q and fiscal year 2023 10-K report filed with the Securities Exchange. I will turn it back to Matt for comments on the quarter. Matt?

Matthew Custer, President and Chief Executive Officer

This quarter, we are seeing consumers shift their spending from goods to experiences and services due to the high cost of living. In response to these changing trends, we have created a new position, Chief Strategic and Commercial Officer, to lead our market strategy and explore revenue opportunities. Ms. Collette Kakuk has been appointed to this role starting August 1, 2023. Collette is a talented creative and business leader who understands the discerning consumer focused on selecting the best healthy products for their families and is well-acquainted with our product features. On the production front, we are operating efficiently and managing production volumes to align with sales demand in order to control costs. On June 30, 2023, the company and Skywords Family Foundation, Inc., which is controlled by the Chairman of the Board, signed a letter of intent to modify the current credit facility to increase the borrowing capacity from $1 million to $2 million, pending approval from First Foundation Bank, our main lender, and USDA, along with the completion of an agreement. Both the bank and USDA have approved this transaction. Looking ahead, I am optimistic about our future as we continue to enhance brand awareness for our naturally derived high-value nutritional products. I will now turn it over to Felicia to discuss the financial results. Felicia?

Felicia Ladin, Chief Financial Officer

Thank you, Matt, and good evening, everyone. Key financial results for the first quarter. Total net sales for the first quarter of fiscal 2024 were $5.1 million compared to $6.7 million for the first quarter of fiscal 2023. Total sales revenue decreased by $1.3 million or 23% from the prior year due to the reasons outlined by Matt. Gross profit for the first quarter of fiscal 2024 was $1.5 million with a gross profit margin of 29.8% compared to gross profit of $2.3 million and a gross profit margin of 34.5% in the first quarter of fiscal 2023, a 4.7 percentage point decrease due to higher costs related to lower production volumes. Operating loss for the first quarter was $1.2 million compared to operating loss of $425,000 in the first quarter of fiscal 2023, an increased loss of $784,000. Net loss for the current quarter was $1.4 million or $0.22 per diluted share compared to a loss of $472,000 or $0.08 per diluted share in the prior year. The company had cash of $648,000 and working capital of $4.4 million compared to $974,000 and $5.4 million, respectively, as of March 31, 2023. I'll hand the call back to Matt for concluding comments. Matt?

Matthew Custer, President and Chief Executive Officer

We've had no questions. Thank you for attending the call. Aloha.