MEDIA RELEASE

Cyanotech Corporation, a world leader in microalgae-based, high-value nutrition and health products, has announced financial results for the fourth quarter and fiscal year 2013, ended March 31, 2013.

Fourth Quarter 2013

For the fourth quarter of fiscal 2013 compared to the fourth quarter of fiscal 2012, net sales were $6,897,000 compared to $5,986,000, an increase of 15%.

Gross profit was $2,708,000, with gross profit margin of 39%, compared to gross profit of $2,053,000 and gross profit margin of 34%. Net income was $2,633,000 or $0.47 per diluted share, compared to net income of $1,158,000 or $0.20 per diluted share.

Net income in the fourth quarter includes a non-cash income tax benefit of $1,912,000 recognized on the elimination of the valuation allowance on deferred tax assets, compared to a reduction of the valuation allowance in the fourth quarter of last year of $892,000.

Operating income for the quarter was $597,000 compared to $311,000 for the same quarter last year, an increase of 92%.

Regarding the 4th quarter fiscal 2013 results (changes shown versus fiscal 2012), Brent Bailey, President and CEO, said: “In the fourth quarter, our packaged consumer products represented more than one-half of company revenue for the first time, accounting for 52% (+14 pts.) of total net sales.”

Net sales growth for these products, by area, was:

* Nutrex Mainland: +73%
* Nutrex Hawaii: +14%
* Nutrex Direct (online): +90%
* Nutrex International: +203%

“Retail dollar growth in the natural products channel of our Astaxanthin products was +59% and our market share was 50% (+22 pts.). Our Spirulina retail dollar growth for the quarter was +55% and our market share was 50% (+8 pts.),” Bailey said.

“The solid revenue growth combined with a stronger gross margin from improved Spirulina production and continued growth in Astaxanthin production, nearly doubled operating profit to $597,000 (+92%) in the fourth quarter,” he said.

Fiscal Year 2013

For fiscal 2013 compared to fiscal 2012, net sales were $27,581,000 compared to $24,631,000, an increase of 12%. Gross profit was $10,958,000, with gross profit margin of 40%, compared to gross profit of $9,774,000 and gross profit margin of 40%.

Net income was $4,209,000 or $0.74 per diluted share, compared to net income of $3,632,000 or $0.66 per diluted share. Net income for the year includes a non-cash income tax benefit of $1,912,000 recognized on the elimination of the valuation allowance on deferred tax assets, compared to a reduction of the valuation allowance of $892,000 in fiscal 2012.

Operating income for the year was $2,299,000 compared to $2,903,000 for fiscal 2012, a decrease of 21%.

Fiscal 2013 net sales were a record $27,581,000 (+12%) and were driven by strong growth in consumer business:

* Nutrex Mainland: +54%
* Nutrex Hawaii: +26%
* Nutrex Direct (online): +81%
* Nutrex International: +105%

“Retail dollar growth of our Astaxanthin and Spirulina products in the natural products channel was +41% and +35%, respectively, and our market share was 40% (+13 pts.) and 45% (+5 pts.), respectively. Net sales per capita of our Nutrex products in the Hawaii market reached $1.47 in fiscal 2013. Packaged products now generate 45% (+10 pts.) of our total revenue, yet utilize only 36% (+16 pts.) and 18% (+6 pts.) of our Spirulina and Astaxanthin production, respectively,” Bailey said.

Operating income for the year was negatively impacted by three factors:

* Under absorbed overhead due to lower than expected Spirulina production in the first three quarters of the year.

* The investments we are making in people, infrastructure and marketing which are driving our topline growth.

* Increased legal fees.

Cyanotech Corporation, a world leader in microalgae technology, produces BioAstin Natural Astaxanthin and Hawaiian Spirulina Pacifica — all natural, functional nutrients that leverage the company’s experience and reputation for quality, building nutritional brands which promote health and well being.

— Find out more:
www.cyanotech.com