There is, of course, no hurricane in Kona. The forecast today and for the next few days is for a slight chance of rain only, winds 5 to 7 mph. The temp right now is 89.
Yes, it would not be material, I would think, but they are showing interest in doing marginal things, like their Green Complete, which is not going to make or break the company, but still, may add some income and become a worthwhile product. Two or three things come immediately to my relatively ignorant mind on such things, but possible by-products might include fertilizer, fish food, and animal feed, especially if they could do some value-added manufacturing, e.g., drying, stamping into pellets, and selling as fertilizer or animal feed. Not now, but perhaps in a year or two, they could buy equipment to do that sort of thing, if it were feasible and worth the effort, all things considered. Another thing to look at is the possibility of manufacturing specialty chemicals, if any could be extracted.
One thing I'm wondering about the extraction is if there is any side benefit to their new manufacturing process besides simply refining the AST. I know in the case of corn ethanol, for example, that other sources of revenue from processing the corn are wet or dry distillers' grains, corn oil, and so on, besides just getting ethanol from the process. In the case of Cyanotech, can they get anything from the biomass that is left over?
Oviously you don't know what you are talking about. For one thing, no one has confirmed the $10,000 estimate per new store for their startup promotions. For another, they've been selling Nutrex at Costco Hawaii for years, so they wouldn't be spending at Kona whatever they spent for their startup promotions for new locations elsewhere. They aren't losing any business in Hawaii but holding steady apparently because their sales were up 1% there last quarter.
Some factors that may bode better for this quarter's results compared to last quarter are 1) the important CO2 extraction equipment and facility, which came online much too late to help last quarter results, but cost some $175,000 in start up expenses. Not only will the company not be spending those start-up costs, it will finally be actively reaping the benefits and savings that come from operating the facility, and 2) The company spent something like $480,000 in Costco sales promotion expenses associated with its 45 new Costco stores last quarter. [I had estimated that there new sales from those 45 stores would amount to about $560,000.] It currently has around 67 Costco stores, but started in January with about 17. So we see how unfavorable that ratio was, 17/50 in terms of startup-promotion costs taking such a large percentage of sales. They are planning to expand into 43 more Costco warehouses "soon," but then the ratio will be 67/43, not such a tough percentage of current total Costco sales, and thus much less of a factor.
I note that, despite all the complaints on this board, about the company not listening, about it being "time to get rid of Bailey," and so on, the company got rid of barley not Bailey. So it's another miscommunication.
Cyanotech has reformulated Green Complete (GC) and launched it today as a new gluten-free, grass-free superfood powder, touting it as one of the few green superfood powders that does not contain wheatgrass. In addition to spirulina, the new GC contains broccoli, kale, and spinach. The old formula had broccoli, kale, barley, and wheatgrass, besides the spirulina. The new powder still contains the same three antioxidants, dulse, acai, and goji berries. Flavoring is from vanilla bean, like the old formula. I never tried the old formula (for one thing, not liking wheatgrass).
It's coming soon, if the last four years is any guide, the first-quarter earnings report, sometime in the week beginning August 10, and the year-over-year comparisons could be quite favorable in certain ways. In last years report, the company detailed a list of legal woes, expenses resulting from discovery and depositions, development of economic and medical expert reports, and an inter Partes Review oral hearing before the Patent Board. These lawsuit expenses alone cost the company $1.5 million during the quarter.
The other big factor I believe will be the impact of 60+ new Costco warehouses. During Last year's quarter, the company was only selling its brands in 2 Costco warehouses. At the end of the 2015 fourth quarter, the company was selling its brands in 62 Costco warehouses (and since then it has added 8 or 9 more). The company recently reported that one company accounts for 13% of all its sales. The rest individually are all below 10%. That company has got to be Costco. Note that Vitamin Shoppe, for example, is somewhere below 10% of sales, yet it has 700 Vitamin Shoppe stores. Imagine that! 71 Costco warehouses way outsell 700 Vitamin Shoppe stores in Nutrex business. Considering that Costco factor, a guess that the company will report double-digit sales growth for the quarter would seem to be a good bet.
We'll see about production, but they're working on it, and it could well be more favorable too, given that there were two relatively dry months during the quarter.
The pond expansion was mentioned in the press release, ". . . , we recently started the first $2.5 million phase of a capacity expansion project that will not only increase the number of ponds and supporting infrastructure, but will also add processes designed to protect the algae from environmental factors during the growth cycle.” I don't know how many new ponds might be anticipated.
The ancient history of the Jan-Mar quarter was interesting, but in JUST 30 DAYS we'll be getting the first quarter earnings report, and we seem to have a lot to look forward to in this current fiscal year, which started in April. The weather was bad for all three months of Jan-Mar, but I heard that at least one of the months in the April-June quarter was one of the driest on record. Don't know about the other months of that quarter, but we're entering the generally more favorable months of spring and summer, as far as weather is concerned. Against $2.8 million in legal costs last fiscal year, we'll have a $2.8 million savings. Add to that the $100,000 savings each month, or $900,000 for this fiscal year, provided by the new extraction operations, and we're up to $3.7 million. Add a conservative $1million to that from the new sales of 45 Costco warehouses, and you get $4.7 million. (Perhaps ohcguy or someone can add-in more factors.) And we don't know how much they're sell from any new ponds they'll add this fiscal year, but we know they are working on adding them.
Ohcguy pointed out that the gross margin for the Jan-mar quarter was "a very, very low 31%," indicating that they possibly "threw the kitchen sink in there (expensing every element of the new ponds and infrastructure possible) knowing it was going to be a bad quarter anyway." So we could see a real pop in the gross margin, also.
Before, when the company had to send its raw product 4,000 miles away to be processed, it didn't seem likely that the company would be acquired. Now that the company is fully vertically integrated, and can potentially expand its production without the bottleneck of having to ship its raw products off site, it's potential value would seem to have been greatly enhanced, particularly if Bailey would be part of the deal. With his expertise and proven record in U.S. retail, he could provide a pathway for entry into the large and profitable U.S. market, which is so difficult for outside companies to break into. Just as an example, I know of two Indian companies, Plethico and EID Parry, that have long wanted access to the U.S. market, but have succeeded here only marginally. Plethico acquired Natrol in 2007, but eventually gave up on the U.S., selling Natrol to Aurobindo Phama in 2014, another Indian company seeking to expand its over-the-counter business in the U.S. I could definitely see larger companies wanting to acquire Cyanotech, especially in light of the fact that the supplements sector has a long history of robust and more-or-less continuous consolidation activity.
I'm a little mystified about the complaint of stockholders here. Exactly one year ago, on June 8, the stock closed at $4.60. Today it closed at $8.75. That's a gain of over 90% for the year. What's the problem? Stock-speculation is a forward-looking game, as the rise of this stock against strong headwinds over the past year illustrates so clearly. That's why it's counter-productive to talk about problems of the past, which only gave stockholders a golden opportunity to buy low and possibly sell high later. It's likely that the company will be able to sell all the BioAstin and Spirulina-Pacifica that it can produce in fiscal year 2015; and the growing relationship with Costco alone could ultimately lead to a DOUBLING of sales in a year or two. Those are some of the real issues.
Ha-ha, I see that jerkweed there has responded with a sophomoric ad hominen attack, and a lot of gibberish.
We can only hope that he will supply us with a "meaningful percentage" answer to his questions. I'm betting on 56%. Lots of meaning there.
Question: "I wonder what percentage of the time "intentions to file" within the 14 day grace period are met or not met?"
If there is no way to find the answer to a question, it is considered meaningless in the field of semantics.
Question: "What makes anyone think that after 3 months, another 2 weeks makes any difference?" I don't know. Is anyone thinking that?
Question: "What do you think the odds are of the 16FQ1 [15FQ1] earnings report, ostensibly due on August 15th, being filed on time?"
There seems to be no way to calculate such "odds," so this would be considered another meaningless question.
Whatever the results of the fourth quarter of 2014, to be reported on July 14, I doubt if they will be long remembered, more likely, soon forgotten in anticipation of the first quarter results for 2015, coming in just a month, about August 14, if last year's release date is any guide.
You may be misinterpreting this, p.faas. Without any other explanation, a "yes" answer could be interpreted as meaning that they did "significantly" WORSE than last year. They don't want to say "yes" to that question and possibly cause a panic and a plunge in the stock price if they don't have to. By saying "no," they are reassuring stockholders that they didn't have significant operations problems during the January to March, 2015 quarter above any of the usual problems that companies sometimes have with their operations on occasion. If, in 14 days. they report a 40% improvement in operations for that quarter or something, no one in the SEC is going to come back at them and say, "Hey, you said "no," but a 40% gain is a significant improvement. We have to fine you x-dollars for lying." The SEC will punish companies who do poorly and lie about it, but it's not in the business of punishing companies who are doing well by their stockholders. In other words, "No" was the only rational answer to the question.