Net loss improved to $(0.2) million for the
three months ended June 30, 2017 compared to $(0.8) million for the
three months ended June 30, 2016. Adjusted EBITDA improved to $0.8
million for the three months ended June 30, 2017 compared to $0.4
million for the three months ended June 30, 2016.
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the three and six months ended June 30,
2017.
For the three months ended June 30, 2017, Luna reported revenues
of $13.6 million and a net loss of $(0.2) million compared to
revenues of $14.6 million and a net loss of $(0.8) million for the
three months ended June 30, 2016. Adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA")
was $0.8 million for the three months ended June 30, 2017 compared
to $0.4 million for the three months ended June 30, 2016. A
reconciliation of net loss to Adjusted EBITDA can be found in the
schedules included in this release.
“The second quarter saw a significant rebound in sales of our
test & measurement instruments," said My Chung, president and
chief executive officer of Luna. "Product sales in our Luna
Technologies brand in the second quarter increased 22% year over
year and 62% sequentially, substantially offsetting the financial
impact of continued softness in the China market for optical
receivers. With the higher margins provided by growth in our test
& measurement product sales and continued focus on expense
control, we improved our net loss by $0.5 million year over year.
The recently announced sale of our high speed optical receiver
business provides the opportunity for a more dedicated focus on
growing the higher margin instrument business."
Second Quarter Financial
Summary
Total revenues for the three months ended June 30, 2017
were $13.6 million compared to $14.6 million for the three months
ended June 30, 2016. Technology development revenues increased
12% to $4.6 million for the three months ended June 30, 2017,
compared to $4.1 million for the three months ended June 30, 2016.
Products and licensing revenues were $9.0 million for the three
months ended June 30, 2017, compared to $10.5 million for the
three months ended June 30, 2016. The decrease in Products and
licensing revenues was primarily driven by lower sales of Luna's
100G integrated coherent receivers in China.
Gross profit was $5.1 million, or 37% of revenues, for the three
months ended June 30, 2017, compared to gross profit of $5.2
million, or 35% of revenues, for the three months ended
June 30, 2016. The increase in gross margin in the second
quarter of 2017 resulted from increased sales of test &
measurement products, which typically have higher average margins
than Luna's other products and services.
Selling, general and administrative expenses were $3.9 million
for the three months ended June 30, 2017, compared to $4.6
million for the three months ended June 30, 2016. The decrease
in selling, general and administrative expense was due to a $0.2
million decrease in incentive compensation, a $0.1 million
reduction in share-based compensation expense, a $0.2 million
reduction in sales-related expenses, and a $0.1 million reduction
in amortization expense.
Research, development and engineering expenses increased
slightly to $1.3 million for the three months ended June 30, 2017
compared to $1.2 million for the three months ended June 30,
2016.
Operating loss improved to $(0.1) million for the three months
ended June 30, 2017, compared to an operating loss of $(0.7)
million for the three months ended June 30, 2016. Net loss
attributable to common stockholders improved to $(0.3) million for
the three months ended June 30, 2017, compared to a net loss
attributable to common stockholders of $(0.8) million for the three
months ended June 30, 2016. Adjusted EBITDA was $0.8 million for
the three months ended June 30, 2017 compared to $0.4 million
for the three months ended June 30, 2016.
Year to Date Financial
Summary
Total revenues for the six months ended June 30, 2017, were
$26.7 million, compared to $28.6 million for the six months ended
June 30, 2016. Technology development revenues increased 13% to
$8.9 million for the six months ended June 30, 2017, compared to
$7.9 million for the six months ended June 30, 2016. Products and
licensing revenues were $17.8 million for the six months ended June
30, 2017, compared to $20.8 million for the six months ended June
30, 2016. Revenues from sales of test & measurement instruments
increased 16%, partially offsetting lower revenues from high speed
optical receiver products in China.
Gross profit decreased to $9.8 million, or 37%, of revenues for
the six months ended June 30, 2017, compared to $10.0 million, or
35% of revenues, for the six months ended June 30, 2016.
Selling, general and administrative expenses decreased to $8.4
million for the six months ended June 30, 2017, compared to $9.2
million for the six months ended June 30, 2016. The decrease in
selling, general and administrative expenses resulted primarily
from lower selling related expenses due to lower revenues in the
products and licensing segment in addition to lower share based
compensation expense.
Research, development and engineering expenses were
substantially unchanged at $2.7 million for the six months ended
June 30, 2017 and $2.8 million for the six months ended June 30,
2016.
Operating loss improved to $(1.4) million for the six months
ended June 30, 2017, compared to $(2.0) million for the six months
ended June 30, 2016. Net loss attributable to common stockholders
improved to $(1.6) million for the six months ended June 30, 2017,
compared to $(2.3) million for the six months ended June 30, 2016.
Adjusted EBITDA increased to $0.7 million for the six months ended
June 30, 2017, compared to $0.3 million for the six months ended
June 30, 2016.
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. 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 11:30 a.m. (EDT) today to discuss its financial
results for the three and six months ended June 30, 2017, 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 56973945.
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 the potential benefits of Luna’s sale
of its high speed optical receiver business. 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 June
30, Six Months Ended June 30,
2017 2016 2017
2016 (unaudited) (unaudited) Revenues:
Technology development $ 4,625,175 $ 4,137,382 $ 8,901,624 $
7,860,644 Products and licensing 8,951,296
10,509,522 17,793,232 20,773,273
Total revenues 13,576,471 14,646,904
26,694,856 28,633,917 Cost of revenues:
Technology development 3,439,118 3,181,447 6,661,474 6,061,282
Products and licensing 5,056,449 6,294,607
10,277,225 12,558,180 Total cost
of revenues 8,495,567 9,476,054
16,938,699 18,619,462 Gross profit
5,080,904 5,170,850 9,756,157
10,014,455 Operating expense: Selling, general and
administrative 3,936,207 4,581,776 8,431,911 9,227,060 Research,
development and engineering 1,263,911
1,240,655 2,708,738 2,791,146
Total operating expense 5,200,118 5,822,431
11,140,649 12,018,206 Operating
loss (119,214 ) (651,581 ) (1,384,492 )
(2,003,751 ) Other income (expense): Other expense (1,225 ) (39,489
) (869 ) (35,545 ) Interest expense (60,386 ) (78,906
) (124,760 ) (165,079 ) Total other expense
(61,611 ) (118,395 ) (125,629 ) (200,624 )
Loss before income taxes (180,825 ) (769,976 ) (1,510,121 )
(2,204,375 ) Income tax expense 40,937 1,000
67,627 26,175 Net loss (221,762
) (770,976 ) (1,577,748 ) (2,230,550 ) Preferred stock dividend
29,536 24,580 63,632
45,790 Net loss attributable to common stockholders $
(251,298 ) $ (795,556 ) $ (1,641,380 ) $ (2,276,340 ) Net loss per
share attributable to common stockholders: Basic and diluted $
(0.01 ) $ (0.03 ) $ (0.06 ) $ (0.08 ) Weighted average common
shares and common equivalent shares outstanding: Basic and diluted
27,600,147 27,557,960 27,570,919
27,517,792
Luna Innovations Incorporated
Consolidated Balance Sheets
June 30, 2017
December 31, 2016 (unaudited) Assets Current
assets: Cash and cash equivalents $ 10,291,255 $ 12,802,458
Accounts receivable, net 13,150,291 14,297,725 Inventory 9,540,754
8,370,235 Prepaid expenses and other current assets
1,266,090 1,627,175 Total current assets
34,248,390 37,097,593 Property and equipment, net 6,882,576
6,780,838 Intangible assets, net 8,003,009 8,681,263 Goodwill
2,348,331 2,348,331 Other assets 68,778 88,948
Total assets $ 51,551,084 $ 54,996,973
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
52,404 52,128 Accounts payable 3,958,144 4,466,192 Accrued
liabilities 8,131,316 8,667,100 Deferred revenue 946,146
949,603 Total current liabilities 14,921,343
15,968,356 Long-term deferred rent 1,337,893 1,403,957 Long-term
debt obligations 1,511,520 2,420,032 Long-term capital lease
obligations 89,054 114,940
Total
liabilities 17,859,810 19,907,285
Commitments and contingencies Stockholders’ equity: Preferred
stock, par value $0.001, 1,321,514 shares authorized, issued and
outstanding at June 30, 2017 and December 31, 2016 1,322 1,322
Common stock, par value $0.001, 100,000,000 shares authorized,
28,226,436 and 27,988,104 shares issued, 27,688,710 and 27,541,277
shares outstanding at June 30, 2017 and December 31, 2016 28,878
28,600 Treasury stock at cost, 537,727 and 446,827 shares at June
30, 2017 and December 31, 2016 (661,253 ) (517,987 ) Additional
paid-in capital 82,837,888 82,451,958 Accumulated deficit
(48,515,561 ) (46,874,205 )
Total stockholders’
equity 33,691,274 35,089,688
Total liabilities and stockholders’ equity $ 51,551,084
$ 54,996,973
Luna Innovations Incorporated
Consolidated Statements of Cash
Flows
Six Months Ended June 30,
2017 2016 (unaudited) Cash
flows provided by/(used in) operating activities Net loss $
(1,577,748 ) $ (2,230,550 ) Adjustments to reconcile net loss to
net cash used in operating activities Depreciation and amortization
1,753,748 1,861,603 Share-based compensation 321,756 465,028 Bad
debt expense 40,753 50,515 Gain on disposal of fixed assets (670 )
— Change in assets and liabilities Accounts receivable 1,106,681
(167,749 ) Inventory (1,170,519 ) 474,072 Other current assets
325,005 (306,371 ) Accounts payable and accrued expenses (1,109,870
) (1,076,784 ) Deferred revenue (3,457 ) (81,830 )
Net cash used in operating activities (314,321 )
(1,012,066 )
Cash flows provided by/(used in) investing
activities Acquisition of property and equipment (796,217 )
(1,294,775 ) Intangible property costs (318,942 ) (244,198 )
Proceeds from sale of property and equipment 3,000
— Net cash used in investing activities
(1,112,159 ) (1,538,973 )
Cash flows provided by/(used
in) financing activities Payments on capital lease obligations
(25,611 ) (32,149 ) Payments of debt obligations (916,666 )
(916,667 ) Repurchase of common stock (143,266 ) (156,386 )
Proceeds from the exercise of options 820 —
Net cash used in financing activities (1,084,723 )
(1,105,202 )
Net decrease in cash or cash equivalents
(2,511,203 ) (3,656,241 ) Cash and cash equivalents-beginning of
period 12,802,458 17,464,040 Cash and
cash equivalents-end of period $ 10,291,255 $ 13,807,799
Luna Innovations Incorporated
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Three Months Ended June
30, Six Months Ended June 30,
2017 2016 2017
2016 (unaudited) (unaudited) Net loss $
(221,762 ) $ (770,976 ) $ (1,577,748 ) $ (2,230,550 ) Interest
expense 60,386 78,906 124,760 165,079 Tax expense 40,937 1,000
67,627 26,175 Depreciation and amortization 792,983
921,802 1,753,748 1,861,603
EBITDA 672,544 230,732 368,387 (177,693 ) Share-based
compensation 151,672 206,225
321,756 465,028 Adjusted EBITDA $ 824,216
$ 436,957 $ 690,143 $ 287,335
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170810005650/en/
Investor Contact:Luna Innovations IncorporatedDale
Messick, CFO, 1-540-769-8400IR@lunainc.com
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