Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the fourth quarter and year ended December
31, 2011.
For the fourth quarter of 2011, Luna realized a net loss
attributable to common shareholders of $0.4 million, compared to a
net loss attributable to common shareholders of $0.5 million for
the fourth quarter of 2010. Revenues decreased to $8.1 million in
the fourth quarter of 2011 from $9.1 million in the fourth quarter
of the preceding year, with a corresponding reduction in gross
profit to $2.7 million for the most recent quarter compared to $3.4
million in the prior year quarter. This decline was largely offset
by an improvement of 27% in operating expenses, which totaled $3.2
million in the last quarter of 2011 compared to $3.7 million in the
fourth quarter of 2010. Additionally, the company generated
positive operating cash flow of $2.4 million for the fourth quarter
of 2011.
For the year, total revenues increased 3% compared to 2010,
driven by a 9% growth in product and license revenue. Total
revenues grew to $35.6 million for 2011 compared to $34.5 million
in 2010, including an increase in product and license revenue to
$13.2 million in 2011 compared to $12.1 million in 2010. Full year
revenues in the company’s technology development segment were
unchanged at $22.4 million in 2011 and in 2010. Gross profit
increased to $13.2 million for 2011 compared to gross profit of
$12.9 million in 2010. Net loss attributable to common shareholders
improved 49% to $1.5 million, or $0.11 per common share, for 2011
versus a net loss attributable to common shareholders of $3.0
million, or $0.23 per common share, for 2010.
Adjusted EBITDA, a non-GAAP measure, which is earnings before
interest, taxes, depreciation and amortization, excluding
litigation and reorganization related items and non-cash
stock-based compensation and warrant expense, decreased to $2.6
million for 2011 from $2.8 million in 2010.
“I am pleased with our return to positive cash flow and bottom
line improvement in the fourth quarter as the quarterly decline in
revenue we had expected was realized,” said My Chung, chief
executive officer of Luna. “As we move ahead into 2012 with a still
uncertain economy, we will remain focused on our strategic
initiatives in fiber optic sensing and secure computing
opportunities to deliver value to our shareholders.”
Fourth Quarter Financial and Business
Summary
-- Total revenues decreased by 10%, to $8.1 million for the
fourth quarter of 2011, from $9.1 million for the fourth quarter of
2010.
-- Technology development revenues decreased by 8%, to $5.0
million for the fourth quarter of 2011, from $5.5 million for the
fourth quarter of 2010.
-- Product and license revenue decreased by 13%, to $3.1 million
in the fourth quarter of 2011, from $3.6 million in the fourth
quarter of 2010, reflecting lower sales of fiber optic test and
measurement equipment.
-- Gross profit decreased to $2.7 million for the fourth quarter
of 2011, from $3.4 million for the fourth quarter of 2010.
-- Selling, general and administrative expenses decreased by 25%
to $2.4 million, or 30% of total revenues for the fourth quarter of
2011, from $3.2 million, or 36% of total revenues, for the fourth
quarter of 2010.
-- Total operating expenses decreased to $3.2 million, or 39% of
total revenues, for the fourth quarter of 2011, from $3.7 million,
or 41% of total revenues for the fourth quarter of 2010.
-- Adjusted EBITDA decreased to $0.6 million for the fourth
quarter of 2011, from $1.0 million for the fourth quarter of
2010.
-- Net loss attributable to common shareholders improved to $0.4
million, or ($0.03) per basic and diluted common share, for the
fourth quarter of 2011, compared to a net loss attributable to
common stockholders of $0.5 million, or ($0.04) per basic and
diluted common share, for the fourth quarter of 2010.
-- Cash and cash equivalents totaled $8.9 million at December
31, 2011, as compared to $7.2 million at December 31, 2010 and $6.8
million at September 30, 2011.
Year Ended December 31, 2011 Financial
Summary
-- Total revenue increased $1.1 million, or 3%, to $35.6 million
for the year ended December 31, 2011, compared to $34.5 million for
the year ended December 31, 2010.
-- Product and license revenue increased by 9%, to $13.2 million
for the year ended December 31, 2011, from $12.1 million for the
year ended December 31, 2010. Included in this growth was an
increase of $0.4 million in revenue for contracted product
development activities, primarily related to fiber optic shape
sensing and localization for minimally invasive surgery.
-- Technology development revenues were unchanged at $22.4
million for the year ended December 31, 2011 and for the year ended
December 31, 2010.
-- Gross profit increased by 2%, to $13.2 million for the year
ended December 31, 2011, from $12.9 million for the year ended
December 31, 2010.
-- Selling, general and administrative expenses decreased by 11%
to $11.8 million, or 33% of total revenues, for the year ended
December 31, 2011, from $13.3 million, or 39% of total revenues,
for the year ended December 31, 2010.
-- Total operating expenses decreased by 5% to $14.5 million, or
41% of total revenues, for the year ended December 31, 2011, from
$15.2 million, or 44% of total revenues, for the year ended
December 31, 2010.
-- Adjusted EBITDA decreased to $2.6 million for the year ended
December 31, 2011 from $2.8 million for the year ended December 31,
2010.
-- Net loss attributable to common stockholders improved to $1.5
million, or $0.11 per basic and diluted common share, for the year
ended December 31, 2011, compared to a net loss attributable to
common stockholders of $3.0 million, or $0.23 per basic and diluted
common share, for the year ended December 31, 2010.
--Awarded $12 million multi-year contract to advance the unique
technology developed within the company’s Secure Computing and
Communications group.
--Launched the ODiSI product for enhanced strain and temperature
measurement using optical fiber. This new product will initially
target customers in composites manufacturing and in energy.
Outlook for the First Quarter and Full
Year 2012
Based on information as of March 8, 2012, the company expects
total revenue for 2012 to be in the range of $32.5 million to $37.0
million. Also for 2012, the company anticipates a net loss to
common stockholders in the range of $0.2 million to $1.2 million.
For the first quarter of 2012, the company expects revenue of
approximately $8.0 million to $8.5 million and a net loss
attributable to common stockholders of approximately $0.2 million
to $0.6 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
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. 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. (EST) today to discuss its
financial results and business developments for the fourth quarter
and full year of 2011 and expectations for 2012. The call can be
accessed by dialing 866.713.8565 domestically or
617.597.5324 internationally prior to the start of the call.
The participant access code is 21120821. 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,
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. 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 first quarter
and full year 2012, as well as the company’s focus on opportunities
in fiber optic sensing and secure computing. 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 first quarter and full year 2012 could change,
failure of demand for the company’s products and services to meet
expectations, and 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 www.sec.gov and at the company’s website at
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
Condensed Consolidated Statements of
Operations
Three months ended
Year ended
December 31,
December 31,
2011
2010
2011
2010
(unaudited)
(unaudited)
Revenues Technology development $ 5,011,387 $ 5,475,310 $
22,417,902 $ 22,404,931 Product and license 3,137,113
3,593,510 13,195,822 12,133,463
Total revenues 8,148,500 9,068,820
35,613,724 34,538,394
Cost of revenues Technology development 3,882,508 4,248,758
15,793,279 15,808,108 Product and license 1,530,436
1,453,967 6,589,943 5,786,567
Total cost of revenues 5,412,944
5,702,725 22,383,222 21,594,675
Gross profit 2,735,556 3,366,095
13,230,502 12,943,719 Operating
expenses Selling, general and administrative 2,448,321 3,246,191
11,788,866 13,297,705 Research, development and engineering 724,455
451,701 2,674,730 1,694,643 Reorganization costs -
12,490 - 174,292 Total
operating expenses 3,172,776 3,710,382
14,463,596 15,166,640 Operating
loss (437,220 ) (344,287 ) (1,233,094 ) (2,222,921 ) Other
income (expense) Interest (85,890 ) (122,163 ) (376,524 ) (474,408
) Other 169,772 84,109 227,565
77,299 Loss before income taxes
(353,338 ) (382,341 ) (1,382,053 ) (2,620,030 ) Income tax
expense - - 10,307
- Net loss (353,338 ) (382,341 ) (1,392,360 )
(2,620,030 ) Preferred stock dividend 32,510
93,000 127,462 360,631
Net loss attributable to common shareholders $ (385,848 ) $
(475,341 ) $ (1,519,822 ) $ (2,980,661 ) Net loss per share
of common stock Basic and diluted $ (0.03 ) $ (0.04 ) $ (0.11 ) $
(0.23 ) Weighted average shares Basic and diluted
13,794,361 13,360,809 13,647,555
13,009,326
Luna Innovations Incorporated
Condensed Consolidated Balance
Sheets
December 31,
2011
2010
(unaudited)
Assets Current Assets Cash $ 8,939,127 $ 7,216,580 Accounts
receivable, net 5,958,086 7,669,625 inventory, net 3,330,773
3,106,600 Prepaid expenses and other current 1,107,155
710,558 Total current assets 19,335,141
18,703,363 Property and equipment, net
2,816,674 3,204,670 Intangible assets, net 539,563 664,418 Other
assets 228,043 303,210 Total long term
assets 3,584,280 4,172,298 Total
assets $ 22,919,421 $ 22,875,661 Liabilities
and stockholders' equity Current liabilities Current portion of
long term debt $ 1,625,000 $ 1,195,784 Current portion of capital
leases 50,949 2,194 Line of credit - 2,500,000 Accounts payable
1,656,602 2,008,183 Accrued liabilities 3,612,193 3,549,604
Deferred credits 1,462,603 1,392,602
Total current liabilities 8,407,347 10,648,367
Long term liabilities Long term debt obligations
3,625,000 2,611,609 Long term capital lease obligations
183,008 - Total long term liabilities
3,808,008 2,611,609 Total liabilities
12,215,355 13,259,976
Commitments and Contingencies - - Stockholders equity
Preferred stock 1,322 1,322 Common stock 13,969 13,526 Additional
paid in capital 59,289,516 56,681,756 Accumulated deficit
(48,600,741 ) (47,080,919 ) Total stockholders' equity
10,704,066 9,615,685 Total
liabilities and stockholders equity $ 22,919,421 $
22,875,661
Luna Innovations Incorporated
Condensed Consolidated Statements of
Cash Flows
Year ended December 31,
2011
2010
(unaudited)
Cash provided by/ (used in) operating activities Net loss $
(1,392,360 ) $ (2,620,030 )
Adjustments to reconcile net loss to cash
provided by (used in) operating activities
Depreciation and amortization 1,462,511 1,331,809 Share based
compensation 2,163,290 3,472,330 Bad debt expense Changes in
operating assets and liabilities Accounts receivable 1,711,539
(466,422 ) Inventory (224,173 ) (261,972 ) Other assets (321,430 )
669,759 Accounts payable and accrued expenses (288,989 ) 7,091,386
Accrued litigation settlement - (9,669,728 ) Deferred credits
(119,999 ) 365,586 Net cash provided by (used
in) operating activities 2,990,389 (87,282 )
Cash used in investing activities Acquisition of property
and equipment (327,704 ) (85,149 ) Intangible property costs
(347,813 ) (365,533 ) Net cash used in investing activities
(675,517 ) (450,682 ) Cash (used in)/ provided
by financing activities Proceeds from debt obligations 6,000,000
2,500,000 Payments on debt obligations (6,867,393 ) (834,119 )
Payment on capital lease obligations (42,383 ) (5,316 ) Proceeds
from exercise of options and warrants 317,451
865,177 Net cash (used in)/ provided by financing activities
(592,325 ) 2,525,742 Net change in cash
1,722,547 1,987,778 Cash at beginning of period
7,216,580 5,228,802 Cash at end of period $
8,939,127 $ 7,216,580
Luna Innovations, Incorporated
Reconciliation of Net Income (Loss) to
EBITDA and Adjusted EBITDA
Three months ended
Year ended
December 31,
December 31,
2011
2010
2011
2010
(unaudited)
(unaudited)
Reconciliation of Net Income (Loss) to
EBITDA and Adjusted EBITDA:
Net loss $ (353,338 ) $ (382,341 ) $ (1,392,360 ) $ (2,620,030 )
Interest 85,891 122,163 376,524 474,408 Taxes - - 10,307 -
Depreciation and amortization 419,811 378,172
1,462,511 1,331,809 EBITDA
152,364 117,994 456,982 (813,813 ) Share based compensation
426,018 832,306 2,163,290 3,472,330 Reorganization costs -
12,490 - 174,292
Adjusted EBITDA $ 578,382 $ 962,790 $ 2,620,272
$ 2,832,809
Luna Innovations (NASDAQ:LUNA)
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