Net loss for the third quarter of 2016 improved
by 44%, or $0.4 million, compared to the third quarter of 2015.
Adjusted EBITDA improved in the third quarter of 2016 by 84%, or
$0.3 million, compared to the third quarter of 2015.
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the three and nine months ended
September 30, 2016.
For the three months ended September 30, 2016, revenues
increased by $1.4 million, net loss improved by $0.4 million, and
adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") increased by $0.3 million,
compared to the three months ended September 30, 2015. A
reconciliation of net loss to Adjusted EBITDA can be found in the
schedules included in this release.
“We are extremely pleased with our continued improvement in
operating results as we remain keenly focused on driving our
operations to profitability," said My Chung, president and chief
executive officer of Luna. "The third quarter showed increasing
demand for our ODiSI systems for the measurement of strain in
composite materials, and our recently announced new orders for 100G
coherent receivers provides additional momentum for growth in the
fourth quarter. We believe that these factors continue to validate
our focus on high speed optical receivers and our ODiSI platform as
the two key strategic initiatives that, along with our continued
aggressive management of operating expenses, will provide
significant enhanced value to our customers and to our
stockholders."
Third Quarter Financial
Summary
Total revenues for the three months ended September 30,
2016 were $14.6 million compared to $13.2 million for the three
months ended September 30, 2015, representing an 11% growth
year over year. Product and licensing revenues grew to $10.3
million for the three months ended September 30, 2016,
compared to $9.9 million for the three months ended September 30,
2015. Technology development revenues were $4.3 million for the
three months ended September 30, 2016, compared to $3.3 million for
the three months ended September 30, 2015.
Gross profit increased to $5.6 million for the three months
ended September 30, 2016, compared to gross profit of $5.0
million for the three months ended September 30, 2015. Overall
gross margin remained consistent, as gross profit was 38% of total
revenues in each period.
Selling, general and administrative expenses were $4.6 million
for the three months ended September 30, 2016, compared to
$4.2 million for the three months ended September 30, 2015.
Research, development and engineering expenses decreased to $1.4
million for the third quarter of 2016 compared to $1.5 million for
the third quarter of 2015.
Operating loss improved to $(0.4) million for the three months
ended September 30, 2016, compared to an operating loss of
$(0.7) million for the three months ended September 30, 2015.
Net loss attributable to common stockholders improved to $(0.5)
million for the three months ended September 30, 2016, compared to
a net loss attributable to common stockholders of $(0.8) million
for the three months ended September 30, 2015. Adjusted EBITDA
improved to $0.7 million for the three months ended
September 30, 2016, compared to $0.4 million for the three
months ended September 30, 2015.
Year to Date Financial
Summary
For the nine months ended September 30, 2016, total
revenues were $43.3 million compared to $28.6 million for the nine
months ended September 30, 2015. Total revenues of $43.3
million for the nine months ended September 30, 2016 reflect
an increase of 16% compared to total combined revenues of $37.4
million for Luna and Advanced Photonix, Inc. ("API") for the nine
months ended September 30, 2015.
Gross profit increased to $15.6 million, or 36% of total
revenues, for the nine months ended September 30, 2016,
compared to $11.5 million, or 40% of total revenues, for the nine
months ended September 30, 2015. The decline in the gross margin
percentage is attributable to a greater proportion of revenues
being generated from the sales of HSOR products, which typically
carry a lower gross margin than the test & measurement products
of Luna's historical business.
Selling, general and administrative expenses decreased to $13.8
million for the nine months ended September 30, 2016, compared
to $13.9 million for the nine months ended September 30, 2015.
Selling, general and administrative expenses for the nine months
ended September 30, 2015 included $3.6 million of non-recurring
merger-related expenses. Research, development and engineering
expenses were $4.2 million for the nine months ended
September 30, 2016, compared to $3.0 million for the nine
months ended September 30, 2015. The operations of API were not
included in our operating expenses prior to the closing of our
merger on May 8, 2015, resulting in this overall increase in our
operating expenses year over year.
Net loss attributable to common stockholders was $(2.8) million
for the nine months ended September 30, 2016, compared to net
loss attributable to common stockholders of $(5.7) million for the
nine months ended September 30, 2015. Adjusted EBITDA improved
to $1.0 million for the nine months ended September 30, 2016,
compared to $0.6 million for the nine months ended
September 30, 2015.
Non-GAAP Measures
In evaluating the operating performance of its business, Luna’s
management considers Adjusted EBITDA, which excludes certain
charges and credits that are required by generally accepted
accounting principles (“GAAP”). Adjusted EBITDA provides useful
information to both management and investors by excluding the
effect of certain non-cash expenses and items that Luna believes
may not be indicative of its operating performance, because either
they are unusual and Luna does not expect them to recur in the
ordinary course of its business or they are unrelated to the
ongoing operation of the business in the ordinary course, including
expenses incurred in connection with Luna's merger with API.
Adjusted EBITDA should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results. Adjusted EBITDA has
been reconciled to the nearest GAAP measure in the table following
the financial statements attached to this press release.
Conference Call
Information
As previously announced, Luna will conduct an investor
conference call at 5:00 p.m. (EST) today to discuss its financial
results for the three and nine months ended September 30,
2016, and recent business developments. The call can be accessed by
dialing 844.578.9643 domestically or 270.823.1522 internationally
prior to the start of the call. The participant access code is
10059845. Investors are advised to dial in at least five minutes
prior to the call to register. The conference call will also be
webcast live over the Internet. The webcast can be accessed by
logging on to the “Investor Relations” section of the Luna website,
www.lunainc.com, prior to the event.
The webcast will be archived under the “Webcasts and Presentations”
section of the Luna website for at least 30 days following the
conference call.
About Luna
Luna Innovations Incorporated (www.lunainc.com) is a leader in
optical technology, providing unique capabilities in high speed
optoelectronics and high performance fiber optic test products for
the telecommunications industry and distributed fiber optic sensing
for the aerospace and automotive industries. Luna is organized into
two business segments, which work closely together to turn ideas
into products: a Technology Development segment and a Products and
Licensing segment. Luna's business model is designed to accelerate
the process of bringing new and innovative technologies to
market.
Forward-Looking
Statements
The statements in this release that are not historical facts
constitute “forward-looking statements” made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of
1995 that involve risks and uncertainties. These statements include
Luna's expectations regarding Luna’s future financial performance
and potential growth opportunities. Management cautions the reader
that these forward-looking statements are only predictions and are
subject to a number of both known and unknown risks and
uncertainties, and actual results, performance, and/or achievements
of Luna may differ materially from the future results, performance,
and/or achievements expressed or implied by these forward-looking
statements as a result of a number of factors. These factors
include, without limitation, failure of demand for Luna's products
and services to meet expectations, technological challenges and
those risks and uncertainties set forth in Luna’s periodic reports
and other filings with the Securities and Exchange Commission
("SEC"). Such filings are available on the SEC’s website at
www.sec.gov and on Luna’s website at www.lunainc.com. The
statements made in this release are based on information available
to Luna as of the date of this release and Luna undertakes no
obligation to update any of the forward-looking statements after
the date of this release.
Luna Innovations Incorporated
Consolidated Statements of
Operations
Three Months Ended September 30,
Nine Months Ended September 30, 2016
2015 2016 2015
(unaudited) (unaudited) Revenues: Technology
development $ 4,312,372 $ 3,277,442 $ 12,173,016 $ 9,881,228
Products and licensing 10,306,548 9,927,788
31,079,821 18,688,852 Total
revenues 14,618,920 13,205,230
43,252,837 28,570,080 Cost of revenues:
Technology development 3,106,098 2,558,987 9,167,380 7,218,757
Products and licensing 5,903,522 5,667,170
18,461,702 9,886,557 Total cost
of revenues 9,009,620 8,226,157
27,629,082 17,105,314 Gross profit
5,609,300 4,979,073 15,623,755
11,464,766 Operating expense: Selling, general and
administrative 4,567,168 4,210,718 13,793,051 13,916,545 Research,
development and engineering 1,403,678
1,491,096 4,194,824 2,982,451
Total operating expense 5,970,846 5,701,814
17,987,875 16,898,996 Operating
loss (361,546 ) (722,741 ) (2,364,120 )
(5,434,230 ) Other income (expense): Other (expense) income, net
(231 ) 14,765 (36,940 ) (7,602 ) Interest expense (73,599 )
(77,417 ) (238,689 ) (136,520 ) Total other
expense (73,830 ) (62,652 ) (275,629 )
(144,122 ) Loss before income taxes (435,376 ) (785,393 )
(2,639,749 ) (5,578,352 ) Income tax expense 9,702
16,296 35,877 19,104 Net
loss (445,078 ) (801,689 ) (2,675,626 ) (5,597,456 ) Preferred
stock dividend 28,941 18,217
74,731 64,798 Net loss attributable to common
stockholders $ (474,019 ) $ (819,906 ) $ (2,750,357 ) $ (5,662,254
) Net loss per share attributable to common stockholders: Basic and
diluted $ (0.02 ) $ (0.03 ) $ (0.10 ) $ (0.26 ) Weighted average
common shares and common equivalent shares outstanding: Basic and
diluted 27,605,028 27,393,392
27,531,730 21,530,315
Luna Innovations Incorporated
Consolidated Balance Sheets
September 30, 2016
December 31, 2015 (unaudited)
Assets Current assets: Cash and cash equivalents $
13,183,151 $ 17,464,040 Accounts receivable, net 11,976,920
11,034,557 Inventory 7,898,724 8,863,167 Prepaid expenses and other
current assets 1,770,071
1,388,439 Total current assets 34,828,866 38,750,203
Property and equipment, net 7,112,535 6,614,238 Intangible assets,
net 9,053,931 10,404,312 Goodwill 2,348,331 2,274,112 Other assets
88,948 88,948
Total
assets $ 53,432,611 $ 58,131,813
Liabilities and stockholders’ equity Liabilities: Current
Liabilities: Current portion of long-term debt obligations $
1,833,333 $ 1,833,333 Current portion of capital lease obligations
50,926 31,459 Accounts payable 3,257,014 4,054,425 Accrued
liabilities 8,220,339 8,304,686 Deferred revenue 988,888
1,109,759 Total current
liabilities 14,350,500 15,333,662 Long-term deferred rent 1,440,146
1,564,229 Long-term debt obligations 2,916,667 4,291,667 Long-term
capital lease obligations 128,612
35,237
Total liabilities 18,835,925
21,224,795 Commitments and
contingencies Stockholders’ equity: Preferred stock, par value
$0.001, 1,321,514 shares authorized, issued and outstanding at
September 30, 2016 and December 31, 2015 1,322 1,322 Common stock,
par value $0.001, 100,000,000 shares authorized, 27,982,877 and
27,644,832 shares issued, 27,542,401 and 27,477,181 shares
outstanding at September 30, 2016 and December 31, 2015 28,262
28,178 Treasury stock at cost, 440,427 and 167,652 shares at
September 30, 2016 and December 31, 2015 (509,994 ) (184,934 )
Additional paid-in capital 82,226,909 81,461,907 Accumulated
deficit (47,149,813 ) (44,399,455 )
Total stockholders’ equity 34,596,686
36,907,018
Total liabilities and
stockholders’ equity $ 53,432,611 $
58,131,813
Luna Innovations Incorporated
Consolidated Statements of Cash
Flows
Nine Months Ended September 30,
2016 2015 (unaudited) Cash
flows used in operating activities Net loss $
(2,675,626 ) $ (5,597,456 ) Adjustments to reconcile net loss to
net cash used in operating activities Depreciation and amortization
2,759,877 1,548,808 Share-based compensation 665,354 846,727 Bad
debt expense 255,522 10,375 Change in assets and liabilities
Accounts receivable (1,197,885 ) (328,061 ) Inventory 964,443
(1,426,968 ) Other current assets (381,632 ) (396,671 ) Accounts
payable and accrued expenses (1,055,060 ) (897,163 ) Deferred
revenue (120,871 ) (72,107 ) Net cash
used in operating activities (785,878 )
(6,312,516 )
Cash flows (used in) provided by investing
activities Acquisition of property and equipment (1,433,260 )
(387,508 ) Intangible property costs (317,287 ) (237,245 ) Cash
acquired in business combination —
374,517 Net cash used in investing activities
(1,750,547 ) (250,236 )
Cash flows (used
in) provided by financing activities Payments on capital lease
obligations (44,404 ) (56,629 ) Payments of debt obligations
(1,375,000 ) (6,337,355 ) Repurchase of common stock (325,060 )
(152,713 ) Proceeds from term loan — 6,000,000 Proceeds from the
exercise of options — 82,516
Net cash used in financing activities (1,744,464 )
(464,181 )
Net decrease in cash or cash
equivalents (4,280,889 ) (7,026,933 ) Cash and cash
equivalents-beginning of period 17,464,040
14,116,969 Cash and cash equivalents-end of
period $ 13,183,151 $ 7,090,036
Luna Innovations Incorporated
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Three Months Ended September 30,
Nine Months Ended September 30, 2016
2015 2016 2015
(unaudited) (unaudited) Net loss $ (445,078 ) $
(801,689 ) $ (2,675,626 ) $ (5,597,456 ) Interest expense 73,599
77,417 238,689 136,520 Tax expense 9,702 16,296 35,877 19,104
Depreciation and amortization 898,274
724,557 2,759,877
1,548,808 EBITDA 536,497 16,581 358,817 (3,893,024 )
Share-based compensation 200,326 275,288 665,354 846,727
Non-recurring merger-related charges —
107,677 —
3,649,179 Adjusted EBITDA $ 736,823 $
399,546 $ 1,024,171 $ 602,882
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version on businesswire.com: http://www.businesswire.com/news/home/20161109006200/en/
Luna Innovations IncorporatedInvestor Contact:Dale
Messick, CFO, 1.540.769.8400IR@lunainc.com
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