Luna Innovations Incorporated (NASDAQ:LUNA), a company focusing
on sensing, instrumentation and nanotechnology, today announced its
financial results for the second quarter and six months ended June
30, 2010.
As compared to the same quarter last year, total revenue
increased by 4%, from $8.7 million in the second quarter of 2009 to
$9.0 million in the second quarter of 2010, driven by a 31% revenue
increase in the company’s product and license segment, from $2.2
million in the second quarter of 2009 to $2.9 million in the second
quarter of 2010. Operating expenses improved by $1.8 million, or
32%, due to the non-recurring costs incurred for litigation and
reorganization activities in 2009, in addition to on-going expense
savings initiatives. The company reported a net loss attributable
to common stockholders of $0.7 million, or $0.05 per common share,
for the second quarter of 2010, as compared to a net loss of $2.4
million, or $0.21 per common share for the second quarter of 2009.
Adjusted EBITDA, which is earnings before interest, taxes,
depreciation and amortization, excluding non-cash stock-based
compensation expense, non-cash charges for impairment of intangible
assets and charges related to the company’s litigation with Hansen
Medical, Inc. and its Chapter 11 reorganization, improved to $0.8
million for the second quarter of 2010, as compared to $0.5 million
for the second quarter of 2009.
Dale Messick, Interim President and Chief Operating Officer,
provided this overview of Luna’s results: “Continued growth in our
fiber optic test & measurement products has resulted in our
return to year over year revenue growth overall. Along with this
growth, we continue to be very pleased with the progress we are
making in our bottom line results, adjusted EBITDA and cash flows
now that the Hansen litigation and reorganization are behind us.
Our adjusted EBITDA excluding litigation and reorganization-related
items improved 80% compared to the second quarter of last year. Our
net cash used in operating activities of $1.7 million for the first
half of the year includes the impact of payment of approximately
$1.9 million in pre-petition liabilities from the 2009
reorganization and related legal fees, absent which cash from
operating activities would have been slightly positive for the
first half of the year.”
Second Quarter Financial
Highlights
-- Total revenues increased by 4%, from $8.7 million for the
second quarter of 2009 to $9.0 million for the second quarter of
2010.
-- Product and license revenues increased by 31% to
approximately $2.9 million for the second quarter of 2010 from $2.2
million for the second quarter of 2009. Technology development
revenues decreased by 6% to $6.1 million for the second quarter of
2010 from $6.5 million for the second quarter of 2009.
-- Gross profit for the second quarter of 2010 of $3.3 million
was consistent with the gross profit realized in the second quarter
of 2009.
-- Selling, general and administrative expenses decreased by 32%
to $3.4 million, or 37% of total revenues for the second quarter of
2010, from $4.9 million, or 57% of total revenues, for the second
quarter of 2009, driven by a reduction in litigation-related
expenses.
-- Total operating expenses decreased to $3.8 million, or 42% of
total revenues for the second quarter of 2010, from $5.6 million,
or 65% of total revenues, for the second quarter of 2009.
-- Adjusted EBITDA excluding litigation and
reorganization-related items increased to $0.8 million in the
second quarter of 2010 from $0.5 million in the second quarter of
2009.
-- Net loss attributable to common stockholders improved to $0.7
million for the second quarter of 2010, compared to a net loss
attributable to stockholders of $2.4 million for the second quarter
of 2009.
-- Cash and cash equivalents totaled $6.3 million at June 30,
2010, as compared to $12.1 million at June 30, 2009 and $5.2
million at December 31, 2009. At June 30, 2010, $2.5 million
continued to be outstanding under the company’s revolving line of
credit.
-- Sales of fiber optic test & measurement, sensing and
instrumentation products increased 42% from $1.4 million in the
second quarter of 2009 to $2.0 million in 2010.
-- Launched the portable Optical Backscatter Reflectometer™(OBR)
4200 in the second quarter with potential applications in areas
including telecommunications, medical imaging, aircraft and
shipboard network verification.
Outlook for
2010
Based on information as of August 10, 2010, the company is
lowering its guidance for the year due to a decline in the rate and
timing of new contract awards in our Technology Development
business segment. The company expects a net loss for the year in
the range of $3.0 million to $4.0 million compared to its previous
guidance of $2.8 million to $3.5 million. The company expects a
revenue range of $33 million to $35.5 million; lowering its
Technology Development revenue to be in the range of $23.0 to $24.0
million for the year and increasing its expectations on the product
and license revenue of $10.0 million to $11.5 million for the full
year. For the third quarter of 2010, the company expects revenue of
approximately $8.5 million to $9.5 million and a net loss of
approximately $0.5 million to $1.0 million.
Non-GAAP
Measures
In evaluating the operating performance of its business, Luna’s
management excludes certain charges and credits that are required
by generally accepted accounting principles (“GAAP”). These
non-GAAP results provide useful information to both management and
investors by excluding items that the company believes may not be
indicative of its operating performance, because either they are
non-cash items or they are unusual items that the company does not
expect to recur in the ordinary course of its business or are
unrelated to the ongoing operation of the business in the ordinary
course. These non-GAAP measures should be considered in addition to
results and guidance prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
The non-GAAP measures included in this press release have 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 Innovations will conduct an
investor conference call at 5:00 p.m. (EDT) today to discuss its
financial results and business developments for the second quarter
of 2010. The call can be accessed by dialing 866.711.8198
domestically or 617.597.5327 internationally prior to the
start of the call. The access code is 36809820. 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 Innovations website,
http://www.lunainnovations.com, prior to the event. The webcast
will be archived under the “Webcasts and Presentations” section of
the Luna Innovations website for at least 30 days following the
conference call.
About Luna Innovations:
Luna Innovations Incorporated (www.lunainnovations.com) is focused on
sensing and instrumentation, and pharmaceutical nanomedicines. Luna
develops and manufactures new-generation products for the
healthcare, telecommunications, energy and defense markets. The
company’s products are used to measure, monitor, protect and
improve critical processes in the markets we serve. Through its
disciplined commercialization business model, Luna has become a
recognized leader in transitioning science to solutions. Luna is
headquartered in Roanoke, Virginia.
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
our expectations regarding financial results for the third quarter
and full year 2010 and applications for the Company’s OBR product.
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 the fact that the outlook for the third
quarter of and full year 2010 could change, and also include,
without limitations, those risks and uncertainties set forth in the
Company’s periodic reports and other filings with the Securities
and Exchange Commission. Such filings are available at the SEC’s
website at http://www.sec.gov, and at the company’s website at
http://www.lunainnovations.com. The statements made in this release
are based on information available to the company as of the date of
this release and Luna Innovations undertakes no obligation to
update any of the forward-looking statements after the date of this
release.
Luna Innovations Incorporated
Consolidated Statements of Operations
Six Months Ended
June 30,
June 30,
2010
2009
2010
2009
(unaudited)
(unaudited)
Revenues: Technology development revenues $ 6,091,503 $ 6,446,971 $
11,902,597 $ 13,329,343 Product and license revenues
2,907,139 2,214,808 4,981,836 3,825,991
Total revenues 8,998,642 8,661,779 16,884,433 17,155,334
Cost of revenues: Technology development costs 4,192,920 4,271,252
8,025,260 9,169,008 Product and license costs 1,499,861
1,048,249 2,719,102 1,926,850 Total
cost of revenues 5,692,781 5,319,501
10,744,362 11,095,858 Gross Profit 3,305,861
3,342,278 6,140,071 6,059,476 Operating expense: Selling, general
and administrative 3,350,524 4,907,564 6,765,036 9,142,073
Research, development, and engineering 430,181 684,755 946,809
1,681,475 Litigation reserve - - - 36,303,643 Impairment of
intangible assets - - - 1,310,598
Total operating expense 3,780,705 5,592,319
7,711,845 48,437,789 Operating loss
(474,844) (2,250,041) (1,571,774) (42,378,313) Other expense
Other expense - 17,244 14,872 18,167 Interest expense
143,485 139,875 227,526 298,864 Total
other expense 143,485 157,119 242,398
317,031 Loss before income taxes (618,329) (2,407,160)
(1,814,172) (42,695,344) Income tax expense - -
- 600,000 Net loss (618,329) (2,407,160)
(1,814,172) (43,295,344) Preferred stock dividend
93,000 - 174,633 - Net loss attributible to
common stockholders $ (711,329) $ (2,407,160) $ (1,988,805) $
(43,295,344) Net loss per share: Basic and Diluted $ (0.05)
$ (0.21) $ (0.16) $ (3.87) Weighted average shares: Basic
and Diluted 12,946,802 11,207,021 12,739,201 11,184,348
Luna Innovations Incorporated
Consolidated Balance Sheets
June 30,
December 31,
2010
2009
Assets (unaudited) Current assets Cash and cash equivalents
$ 6,267,969 $ 5,228,802 Accounts receivable, net 8,044,870
7,203,203 Inventory, net 2,971,791 2,890,364 Prepaid expenses
576,095 560,964 Other current assets 45,530 729,532
Total current assets 17,906,255 16,612,865 Property and
equipment, net 3,678,257 4,129,015 Intangible assets, net 557,829
580,785 Other assets 362,007 435,259
Total
assets $ 22,504,348 $ 21,757,924
Liabilities and stockholders’ equity (deficit)
Liabilities not subject to compromise: Current Liabilities: Line of
Credit 2,500,000 - Current portion of long term-debt obligation
1,296,867 - Accounts payable 2,187,396 1,142,267 Accrued
liabilities 3,278,705 3,386,849 Deferred credits 1,453,460
1,027,016 Total current liabilities 10,716,428
5,556,132 Long-term debt obligation 3,271,696 - Liabilities subject
to compromise - 19,062,000 Total liabilities
13,988,124 24,618,132 Commitments and contingencies Stockholders’
equity (deficit): Preferred stock, par value $0.001,1,321,514
shares authorized, issued and outstanding at June 30, 2010 1,322 -
Common stock, par value $0.001, 100,000,000 shares authorized,
13,119,866 and 11,351,967 shares issued and outstanding at June 30,
2010 and December 31, 2009, respectively 13,199 11,352 Additional
paid-in capital 54,590,767 41,228,698 Accumulated deficit
(46,089,064) (44,100,258) Total stockholders’ equity
(deficit) 8,516,224 (2,860,208)
Total
liabilities and stockholders’ equity (deficit) $
22,504,348 $ 21,757,924
Luna Innovations Incorporated
Consolidated Statements of Cash Flows
Six months ended June 30, 2010
2009 (unaudited) Cash flows used in operating
activities Net loss $ (1,814,172) $ (43,295,344) Adjustments to
reconcile net loss to net cash used in operating activities
Depreciation and amortization 641,979 1,142,846 Impairment of
intangible assets - 1,310,598 Stock-based compensation 1,763,015
1,569,043 Deferred tax expense - 600,000 Change in assets and
liabilities: Accounts receivable (1,007,451) 452,114 Inventory
(127,163) (22,590) Other current assets 668,871 - Other assets
31,024 (60,071) Accounts payable and accrued expenses (2,264,121)
(559,125) Litigation reserve - 36,303,643 Deferred credits
426,444 11,967 Net cash used in operating activities
(1,681,574) (2,546,919)
Cash flows used in
investing activities Acquisition of property and equipment
(39,146) (41,445) Intangible property costs (88,712)
(121,132) Net cash used in investing activities
(127,858) (162,577)
Cash flows provided by (used
in) financing activities Payments on capital lease obligations
(2,684) (5,614) Proceeds from debt obligations 2,500,000 - Payment
of debt obligations (265,657) (714,285) Proceeds from the exercise
of options and warrants 616,940 20,693 Net
cash provided by (used in) financing activities 2,848,599
(699,206)
Net change in cash 1,039,167
(3,408,702) Cash and cash equivalents—beginning of period
5,228,802 15,518,960 Cash and cash equivalents—end of
period $ 6,267,969 $ 12,110,258
Luna Innovations Incorporated
Reconciliation of EBITDA and Adjusted EBITDA to Net Income/
(Loss)
Three Months Ended Six Months Ended
June 30,
June 30, 2010 2009 2010 2009
(unaudited) (unaudited) Reconciliation of net loss to
adjusted EBITDA less litigation and reorganization-related items
Net loss $ (618,329 ) $ (2,407,160 ) $ (1,814,172 ) $
(43,295,344 ) Interest 143,485 139,877 227,526 298,864 Taxes
- - - 600,000 Depreciation and amortization 313,020 523,055 641,979
1,142,843 Impairment of intangible assets - -
- 1,310,598 EBITDA (161,824 )
(1,744,228 ) (944,667 ) (39,943,039 ) Stock-based
compensation 875,675 779,518 1,764,015 1,569,029 Warrant expense
75,139 - 122,183 - Litigation reserve - - - 36,303,643
Fees associated with litigation
and reorganization
39,863 1,465,752 422,750
2,256,133 Adjusted EBITDA less litigation and
reorganization-related items $ 828,853 $ 501,042 $
1,364,281 $ 185,766
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