Pre-tax income from continuing operations of
$0.3 million for the fourth quarter of 2016 versus pre-tax loss
from continuing operations of $(0.9) million for the fourth quarter
of 2015
Adjusted EBITDA of $1.6 million for the fourth
quarter of 2016 versus $0.4 million for the fourth quarter of
2015
Pre-tax loss from continuing operations of
$(2.3) million for the full year 2016 versus $(6.5) million for
2015
Adjusted EBITDA of $2.6 million for the full
year 2016 versus $1.0 million for 2015
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the fourth quarter and year ended December
31, 2016.
For the three months ended December 31, 2016, the company
recognized pre-tax income from continuing operations of $0.3
million compared to a pre-tax loss from continuing operations of
$(0.9) million for the three months ended December 31, 2015.
Adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA") improved to $1.6 million for the
three months ended December 31, 2016, compared to adjusted
EBITDA of $0.4 million for the three months ended December 31,
2015. Adjusted EBITDA is reconciled to pre-tax income (loss) from
continuing operations for the respective periods within the tables
included in this release. Net income attributable to common
stockholders was $0.3 million for the three months ended
December 31, 2016, compared to net income attributable to
common stockholders of $7.9 million for the three months ended
December 31, 2015. Net income for the three months ended
December 31, 2015, included the realization of an $8.3 million
gain associated with the receipt in December 2015 of the final
payments earned with respect to the company's sale of its medical
shape sensing technology in 2014.
“Following our merger with API in 2015, we have remained focused
on the successful execution of our key strategic initiatives and
the realization of operational synergies from the merger to drive
the company to profitability,” said My Chung, president and chief
executive officer of Luna. “We are extremely pleased with the
progress we demonstrated throughout 2016 in increasing our revenues
from our high speed optical receiver products and our ODiSI
products to fuel our growth and improve our profitability. As a
result of this success, for the fourth quarter of 2016 we are able
to report positive quarterly earnings from continuing operations
for the first time since 2011."
Fourth Quarter Financial
Highlights
Total revenues for the three months ended December 31,
2016, were $16.0 million, compared to $15.5 million for the three
months ended December 31, 2015. Technology development
revenues grew to $4.7 million for the three months ended
December 31, 2016, from $3.7 million for the three months
ended December 31, 2015. Product and licensing revenue were
$11.3 million for the three months ended December 31, 2016,
compared to $11.7 million for the three months ended
December 31, 2015.
Gross profit increased to $6.1 million, or 38% of total revenue,
for the three months ended December 31, 2016, compared to
gross profit of $5.0 million, or 33% of total revenue, for the
three months ended December 31, 2015. The improvement in gross
margin percentage resulted from a change in product mix in the
fourth quarter of 2016, principally due to a larger volume of sales
of test and measurement equipment, including ODiSI products, which
typically carry a higher gross margin than do sales of integrated
coherent receivers, which were a proportionately larger component
of revenues for the three months ended December 31, 2015.
Selling, general and administrative expenses increased slightly
to $4.3 million for the three months ended December 31, 2016,
compared to $4.2 million for the three months ended
December 31, 2015. Research, development and engineering
expenses decreased to $1.3 million for the three months ended
December 31, 2016, compared to $1.6 million for the three
months ended December 31, 2015.
Before taxes, the company recognized income from continuing
operations of $0.3 million for the three months ended
December 31, 2016, compared to a pre-tax loss from continuing
operations of $(0.9) million for the three months ended
December 31, 2015.
The company had no income from discontinued operations for the
three months ended December 31, 2016. Income from discontinued
operations was $8.3 million for the three months ended December 31,
2015, representing the payment received by the company in December
2015 to settle all remaining obligations associated with future
technical milestone payments and royalties related to the sale of
the company's medical shape sensing business sold to Intuitive
Surgical in 2014.
Net income attributable to common stockholders was $0.3 million
for the three months ended December 31, 2016, compared to net
income attributable to common stockholders of $7.9 million for the
three months ended December 31, 2015. The decrease in net
income attributable to common stockholders was due to the income
from discontinued operations recognized in December 2015. Adjusted
EBITDA improved to $1.6 million for the three months ended
December 31, 2016, compared to adjusted EBITDA of $0.4 million
for the three months ended December 31, 2015.
Cash and cash equivalents were $12.8 million as of
December 31, 2016, compared to $13.2 million as of September
30, 2016, and $17.5 million as of December 31, 2015. The
decrease in cash and cash equivalents during the three months ended
December 31, 2016 was primarily attributable to $0.4 million
of long term debt repayment during the quarter. The decrease in
cash and cash equivalents for the year ended December 31, 2016
included $1.9 million of long term debt repayment, $1.5 million of
capital expenditures, and $0.3 million of common stock repurchase
activity.
Full Year 2016 Financial
Highlights
Total revenues were $59.2 million for the year ended
December 31, 2016, compared to $44.0 million for the year
ended December 31, 2015. Revenues for 2015 included the
operations of Advanced Photonix, Inc. ("API") for the period from
the closing of the company's merger with API on May 8, 2015 through
December 31, 2015. Products and licensing revenues increased to
$42.4 million for the year ended December 31, 2016, compared
to $30.4 million for the year ended December 31, 2015.
Technology development revenues increased to $16.8 million for the
year ended December 31, 2016 compared to $13.6 million for the
year ended December 31, 2015.
Gross profit for the year ended December 31, 2016, grew to
$21.7 million compared to $16.5 million for the year ended
December 31, 2015. The gross margin was 37% of total revenues
for both 2016 and 2015.
Selling, general and administrative expenses decreased to $18.1
million for the year ended December 31, 2016, compared to
$18.5 million for the year ended December 31, 2015.
Research, development and engineering expenses increased to $5.5
million for the year ended December 31, 2016, compared to $4.3
million for the year ended December 31, 2015. Research,
development and engineering expenses in 2015 included expenses
associated with the operations of API for the period from the
closing of the merger with API on May 8, 2015 through December 31,
2015.
The company's resulting pre-tax loss from continuing operations
improved to $(2.3) million for the year ended December 31,
2016, compared to a pre-tax loss from continuing operations of
$(6.5) million for the year ended December 31, 2015.
For the year ended December 31, 2015, the company
recognized income from discontinued operations of $8.3 million
related to the after-tax gain associated with the sale of the
company's medical shape sensing business.
The company recognized a net loss attributable to common
stockholders of $(2.5) million for the year ended December 31,
2016, compared to net income attributable to common stockholders of
$2.2 million for the year ended December 31, 2015. The net income
for 2015 resulted from the income from discontinued operations
discussed above. Adjusted EBITDA improved $1.6 million, to $2.6
million for the year ended December 31, 2016, compared to $1.0
million for the year ended December 31, 2015.
Non-GAAP Measures
In evaluating the operating performance of its business, the
company'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 the company
believes may not be indicative of its operating performance,
because either they are unusual and the company 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. 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, the company will conduct an investor
conference call at 5:00 p.m. (EDT) today to discuss its financial
results and business developments for the fourth quarter of 2016
and the full year ended December 31, 2016. The call can be
accessed by dialing 855.236.2056 domestically or
267.753.2162 internationally prior to the start of the call. The
participant access code is 84325923. 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 company's 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
the company's expectations regarding the company’s future financial
performance. 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 the company 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 the company’s
products and services to meet expectations, integration or other
operational issues related to the merger, technological challenges
and those risks and uncertainties set forth in the company’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 the company’s website at www.lunainc.com. The
statements made in this release are based on information available
to the company as of the date of this release and the company
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 December
31, Years ended December 31, 2016
2015 2016 2015 (unaudited) (unaudited)
Revenues: Technology development revenues $ 4,653,141 $ 3,717,820 $
16,825,157 $ 13,599,048 Products and licensing revenues 11,305,018
11,732,459 42,385,839 30,421,310 Total
revenues 15,958,159 15,450,279 59,210,996
44,020,358 Cost of revenues: Technology development costs
3,544,065 3,159,858 12,711,447 10,378,616 Products and licensing
costs 6,303,086 7,254,523 24,764,788
17,141,079 Total cost of revenues 9,847,151
10,414,381 37,476,235 27,519,695 Gross profit
6,111,008 5,035,898 21,734,761 16,500,663
Operating expense: Selling, general and administrative
4,346,919 4,209,480 18,139,966 18,481,270 Research, development,
and engineering 1,337,306 1,641,783 5,532,130
4,268,988 Total operating expense 5,684,225 5,851,263
23,672,096 22,750,258 Operating income/(loss)
426,783 (815,365 ) (1,937,335 ) (6,249,595 ) Other expense:
Other income/(expense), net 1,118 (4,769 ) (35,849 ) (9,967 )
Interest expense, net (82,253 ) (83,882 ) (320,942 ) (220,403 )
Total other expense (81,135 ) (88,651 ) (356,791 ) (230,370 )
Income/(loss) from continuing operations before income taxes
345,648 (904,016 ) (2,294,126 ) (6,479,965 ) Income tax
expense/(benefit) 39,488 (489,709 ) 75,366 (470,605 )
Income/(loss) from continuing operations 306,160 (414,307 )
(2,369,492 ) (6,009,360 ) Income from discontinued operations, net
of income taxes — 8,328,790 — 8,326,386
Net income/(loss) 306,160 7,914,483 (2,369,492 ) 2,317,026
Preferred stock dividend 30,527 21,012 105,258
85,830 Net income/(loss) attributable to common stockholders
$ 275,633 $ 7,893,471 $ (2,474,750 ) $ 2,231,196
Net income/(loss) per share from continuing operations:
Basic and diluted $ 0.01 $ (0.02 ) $ (0.09 ) $ (0.26 ) Net income
per share from discontinued operations: Basic and diluted $ — $
0.30 $ — $ 0.36 Net income/(loss) per share attributable to common
stockholders: Basic and diluted $ 0.01 $ 0.29 $ (0.09 ) $ 0.10
Weighted average shares: Basic 27,538,606 27,464,993 27,547,217
23,026,494 Diluted 32,563,013 27,464,993 27,547,217 23,026,494
Luna Innovations Incorporated Consolidated
Balance Sheets
December 31,2016
December 31,2015
(unaudited)
Assets Current assets: Cash and cash equivalents
$ 12,802,458 $ 17,464,040 Accounts receivable, net 14,297,725
11,034,557 Inventory, net 8,370,235 8,863,167 Prepaid expenses
1,627,175 1,388,439 Total current assets 37,097,593
38,750,203 Property and equipment, net 6,780,838 6,614,238
Intangible assets, net 8,681,263 10,404,312 Goodwill 2,348,331
2,274,112 Other assets 88,948 88,948
Total
assets $ 54,996,973 $
58,131,813 Liabilities and stockholders’
equity Current Liabilities: Current portion of long term debt
obligation 1,833,333 1,833,333 Current portion of capital lease
obligation 52,128 31,459 Accounts payable 4,466,192 4,054,425
Accrued liabilities 8,667,100 8,304,686 Deferred revenue 949,603
1,109,759 Total current liabilities 15,968,356
15,333,662 Long-term deferred rent 1,403,957 1,564,229 Long-term
debt obligation 2,420,032 4,291,667 Long-term capital lease
obligation 114,940 35,237
Total liabilities
19,907,285 21,224,795 Commitments and
contingencies Stockholders’ equity: Preferred stock, par value
$0.001, 1,321,514 shares authorized, issued and outstanding at
December 31, 2016 and 2015 1,322 1,322 Common stock, par value
$0.001, 100,000,000 shares authorized, 27,988,104 and 27,644,833
shares issued, 27,541,277 and 27,477,181 shares outstanding at
December 31, 2016 and 2015, respectively 28,600 28,178 Treasury
stock at cost, 167,652 shares at December 31, 2016 and 22,725
shares at December 31, 2015 (517,987 ) (184,934 ) Additional
paid-in capital 82,451,958 81,461,907 Accumulated deficit
(46,874,205 ) (44,399,455 )
Total stockholders’ equity
35,089,688 36,907,018 Total
liabilities and stockholders’ equity $ 54,996,973
$ 58,131,813 Luna Innovations
Incorporated Consolidated Statements of Cash Flows
Years ended December 31, 2016
2015 (unaudited)
Cash flows used in operating
activities: Net income $ (2,369,492 ) $ 2,317,026 Adjustments
to reconcile net income to net cash used in operating activities:
Depreciation and amortization 3,713,879 2,457,032 Stock-based
compensation 860,215 1,124,379 Gain on sale of discontinued
operations, net of income taxes — (8,326,386 ) Allowance for
doubtful accounts 305,593 10,375 Tax benefit from utilization of
loss from current year operations — (510,772 ) Changes in operating
assets and liabilities: Accounts receivable (3,568,761 ) (2,040,323
) Inventory 492,932 (252,934 ) Other assets (238,736 ) (131,411 )
Accounts payable and accrued expenses 564,689 16,429 Deferred
credits (160,156 ) 248,678 Net cash used in operating
activities (399,837 ) (5,087,907 )
Cash flows (used in)/provided
by investing activities: Acquisition of property and equipment
(1,509,984 ) (710,348 ) Intangible property costs (490,200 )
(367,050 ) Cash acquired in business combination — 374,517 Proceeds
from sale of discontinued operations, net — 8,997,595
Net cash (used in)/provided by investing activities (2,000,184 )
8,294,714
Cash flows (used in)/ provided by/ financing
activities: Payments on debt obligations (1,871,635 )
(6,712,355 ) Payments on capital lease obligation (56,873 ) (77,184
) Purchase of treasury stock (333,053 ) (152,713 ) Borrowings under
term loans — 7,000,000 Proceeds from the exercise of options and
warrants — 82,516 Net cash (used in)/provided by
financing activities (2,261,561 ) 140,264
Net change in
cash and cash equivalents (4,661,582 ) 3,347,071 Cash and cash
equivalents—beginning of period 17,464,040 14,116,969
Cash and cash equivalents—end of period $ 12,802,458 $
17,464,040
Supplemental disclosure of cash flow
information Cash paid for interest $ 308,116 $ 187,017 Dividend
on preferred stock, 79,292 shares of common stock issuable for each
of the years ended December 31, 2016 and 2015 $ 105,258 $ 85,830
Cash paid for income taxes $ 233,732 $ 40,167 Cash received for
income tax refunds $ 67,127 $ —
Luna Innovations
Incorporated Reconciliation of Income/(Loss) from Continuing
Operations Before Income Taxes to EBITDA and Adjusted EBITDA
Three months ended December 31, Year
endedDecember 31, 2016 2015
2016 2015 (unaudited)
(unaudited) Income/(loss) from continuing operations before
income taxes $ 345,648 $ (904,016 ) $ (2,294,126 ) $
(6,479,965 ) Interest expense 82,253 83,882 320,942 220,403
Depreciation and amortization 954,002 908,224
3,713,879 2,457,032 EBITDA 1,381,903 88,090 1,740,695
(3,802,530 ) Share-based compensation 194,861 277,714 860,215
1,124,379 Transaction costs — 54,840 —
3,704,019 Adjusted EBITDA $ 1,576,764 $ 420,644
$ 2,600,910 $ 1,025,868
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version on businesswire.com: http://www.businesswire.com/news/home/20170316006261/en/
Luna Innovations IncorporatedInvestor Contact:Dale
Messick, CFO1 540-769-8400IR@lunainc.com
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