Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the second quarter and six months ended June
30, 2012.
As compared to the same quarter last year, total revenue
decreased by 15%, from $9.6 million in the second quarter of 2011
to $8.2 million in the second quarter of 2012, driven primarily by
the continued softness in the telecom test and measurement market
that has negatively affected the company’s products and licensing
revenues since the third quarter of 2011. Gross profit decreased
from $3.7 million for the second quarter of 2011 to $3.1 million
for the second quarter of 2012 with overall margins unchanged at
38%. Offsetting these declines, operating expenses improved 14% to
$3.3 million in the second quarter of 2012 compared to $3.9 million
in the second quarter of 2011. The company reported a net loss
attributable to common stockholders of $269,000, or $0.02 per
common share for the second quarter of 2012, an improvement of 7%
compared to a net loss of $289,000 in the same quarter last year.
Adjusted EBITDA, a non-GAAP measure, which is earnings before
interest, taxes, and non-cash expenses of stock based compensation,
depreciation, amortization and warrant expense, decreased to $0.5
million for the second quarter of 2012, as compared to $0.7 million
for the second quarter of 2011. Cash decreased to $6.6 million at
June 30, 2012 compared to $8.1 million at June 30, 2011.
“Our products and licensing revenues for the most recent quarter
were consistent with our quarterly revenues since the third quarter
of last year, when the telecom test and measurement sector as a
whole declined significantly. Our products and licensing revenues
over the past four quarters have consistently ranged $2.7 million
to $3.1 million. Our growth strategy for the future includes
expansion of our products into markets for fiber optic sensing led
by our new ODiSI platform. I am pleased that we did complete the
roll-out of our new ODiSI-B product with the first shipments of the
product realized in the second quarter,” said My Chung, chief
executive officer of Luna. “Becoming the leading provider of
sensing systems for testing composite materials is one of our key
strategies; therefore, we are encouraged by these initial customer
purchases and committed to continuing to evolve our solution to
respond to the needs of our customers. In addition, we have
continued to make solid progress in driving our other strategic
growth initiatives, focusing on our fiber-optic shape sensing for
medical applications and our cybersecurity solutions.”
Second Quarter Financial and Business
Summary
-- Total revenues decreased by 15%, from $9.6 million in the
second quarter of 2011 to $8.2 million in the second quarter of
2012.
-- Technology development revenues decreased by 5%, to $5.3
million, for the second quarter of 2012, from $5.6 million for the
second quarter of 2011. Technology development revenues decreased
by 6% compared to the first quarter of 2012.
-- Products and licensing revenue decreased by 29%, from $4.0
million in the second quarter of 2011 to $2.8 million in the second
quarter of 2012. Products and licensing revenue increased 5% over
the first quarter of 2012.
-- Gross profit for the second quarter of 2012 decreased to $3.1
million, or 38% of total revenues, from $3.7 million, or 38% of
total revenues, for the corresponding period of 2011.
-- Selling, general and administrative expenses decreased by 17%
to $2.7 million, or 33% of total revenues for the second quarter of
2012, from $3.3 million, or 34% of total revenues, for the second
quarter of 2011.
-- Total operating expenses decreased to $3.3 million, or 41% of
total revenues, for the second quarter of 2012 from $3.9 million,
or 40% of total revenues for the second quarter of 2011.
-- Adjusted EBITDA decreased to $0.5 million in the second
quarter 2012 from $0.7 million in the second quarter of 2011.
-- Net loss attributable to common stockholders for the second
quarter of 2012 decreased to $269,000 from $289,000 for the second
quarter of 2011.
-- Cash and cash equivalents totaled $6.6 million at June 30,
2012, as compared to $7.9 million at March 31, 2012. Cash and cash
equivalents decreased primarily due to payment of liabilities
accrued as of December 31, 2011.
Six Months Ended June 30, 2012
Financial Summary
-- Total revenue decreased by 11% to $16.6 million for the six
months ended June 30, 2012 compared to $18.6 million for the six
months ended June 30, 2011.
-- Technology development revenues decreased by 2%, from $11.2
million for the six months ended June 30, 2011 to $11.0 million for
the six months ended June 30, 2012. Technology development revenues
for the six months ended June 30, 2012 decreased by 2% from the
immediately preceding six month period.
-- Products and licensing revenue decreased by 25%, from $7.4
million for the six months ended June 30, 2011 to $5.6 million for
the six months ended June 30, 2012. Products and licensing revenue
for the six months ended June 30, 2012 decreased 4% from the
immediately preceding six month period.
-- Gross profit for the six months ended June 30, 2012 decreased
by 9%, to $6.4 million, compared to a gross profit of $7.0 million
for the six months ended June 30, 2011. Gross margin percentages
remained steady at 38% of revenues for the first six months of 2012
and 2011.
-- Selling, general and administrative expenses decreased by 20%
from $6.9 million, or 37% of total revenues, for the six months
ended June 30, 2011 to $5.5 million, or 33% of total revenues, for
the six months ended June 30, 2012.
-- Total operating expenses decreased by 16% to $6.8 million, or
41% of total revenues, for the six months ended June 30, 2012
compared to $8.1 million, or 44% of total revenues, for the six
months ended June 30, 2011.
-- Adjusted EBITDA increased by 10% to $1.1 million for the six
months ended June 30, 2012 from $1.0 million for the six months
ended June 30, 2011.
-- Net loss attributable to common stockholders improved to $0.6
million for the six months ended June 30, 2012, compared to a net
loss attributable to common stockholders of $1.4 million for the
six months ended June 30, 2011.
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. (EDT) today to discuss its
financial results and business developments for the second quarter
of 2012 and expectations for the remainder of 2012. The call can be
accessed by dialing 800.659.1942 domestically or
617.614.2710 internationally prior to the start of the call.
The participant access code is 79070603. 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 the demand for the company’s fiber optic
equipment and technologies and the company’s technical
capabilities. 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, technological
challenges 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 Six Months Ended June
30,
June 30,
2012 2011 2012 2011 (unaudited)
(unaudited) Revenues: Technology development revenues $
5,334,320 $ 5,623,074 $ 10,993,816 $ 11,244,689 Product and
licensing revenues 2,845,864 4,000,515
5,559,677 7,377,525 Total revenues 8,180,184
9,623,589 16,553,493 18,622,214 Cost of revenues: Technology
development costs 3,768,081 4,194,442 7,670,979 8,280,608 Product
and license costs 1,267,201 1,767,778
2,514,696 3,340,469 Total cost of revenues
5,035,282 5,962,220 10,185,675 11,621,077
Gross Profit 3,144,902 3,661,369 6,367,818 7,001,137
Operating expense: Selling, general and administrative 2,706,983
3,251,073 5,517,494 6,929,593 Research, development, and
engineering 629,347 620,470 1,314,311
1,180,159 Total operating expense 3,336,330
3,871,543 6,831,805 8,109,752 Operating loss
(191,428 ) (210,174 ) (463,987 ) (1,108,615 ) Other expense,
net: Other income/(expense), net 23,265 37,823 46,533 35,835
Interest expense (74,357 ) (84,303 ) (154,015
) (198,725 ) Total other expense (51,092 ) (46,480 )
(107,482 ) (162,890 ) Loss before income taxes (242,520 )
(256,654 ) (517,469 ) (1,271,505 ) Income tax expense —
— 5,799 10,020 Net loss (242,520 )
(256,654 ) (577,268 ) (1,281,525 ) Preferred stock dividend
26,784 32,708 60,880 74,336 Net loss attributable to common
stockholders $ (269,304 ) $ (289,362 ) $ (638,148 ) $ (1,355,861 )
Net loss per share of common stock: $ (0.02 ) $ (0.02 ) $
(0.05 ) $
(0.10
)
Luna Innovations Incorporated
Condensed Consolidated Balance
Sheets
June 30, December 31, 2012 2011
(unaudited) Assets Current assets Cash and cash
equivalents $ 6,639,519 $ 8,939,127 Accounts receivable, net
7,170,950 5,958,086 Inventory, net 3,395,620 3,330,773 Prepaid
expenses 921,149 1,071,438 Other current assets 35,717
35,717 Total current assets 18,162,955 19,335,141
Property and equipment, net 2,556,583 2,816,674 Intangible assets,
net 455,460 539,563 Other assets 190,460 228,043
Total assets $ 21,365,458 $ 22,919,421
Liabilities and stockholders’ equity Liabilities : Current
Liabilities Current portion of long term debt obligation 1,500,000
1,625,000 Current portion of capital lease obligation 52,496 50,949
Accounts payable 1,854,041 1,656,602 Accrued liabilities 2,579,446
3,612,193 Deferred credits 1,134,112 1,462,603
Total current liabilities 7,120,095 8,407,347 Long-term debt
obligation 3,000,000 3,625,000 Long-term lease obligation
156,367 183,008 Total liabilities 10,276,462
12,215,355 Commitments and contingencies Stockholders’
equity: Preferred stock 1,322 1,322 Common stock 14,091 13,969
Additional paid-in capital 60,312,472 59,289,516 Accumulated
deficit (49,238,889 ) (48,600,741 ) Total
stockholders’ equity 11,088,996 10,704,066
Total liabilities and stockholders’ equity $ 21,365,458 $
22,919,421
Luna Innovations Incorporated
Condensed Consolidated Statements of
Cash Flows
Six months ended June 30, 2012
2011 (unaudited) Cash (used in)/provided by
operating activities Net loss $ (577,268 ) $ (1,281,525 )
Adjustments to reconcile net loss to net cash used in operating
activities Depreciation and amortization 528,113 710,269
Share-based compensation 928,368 1,275,147 Warrant expense 12,032
38,893 Change in assets and liabilities: Accounts receivable
(1,212,864
)
994,149 Inventory (69,186 ) (665,883 ) Other current assets 150,289
(22,503
)
Other assets 37,583 37,583 Accounts payable and accrued expenses
(847,341
)
111,900 Deferred credits
(328,491
)
103,138 Net cash (used in)/provided by operating
activities
(1,378,765
)
1,301,168
Cash flows used in investing
activities Acquisition of property and equipment (123,732 )
(173,945 ) Intangible property costs (55,847 )
(199,741 ) Net cash used in investing activities
(179,579 ) (373,686 )
Cash flows used in financing
activities Payments on capital lease obligations (25,094
) (18,030 ) Proceeds from debt obligations — 6,000,000 Payment of
debt obligations (750,000 ) (6,242,394 ) Proceeds from the exercise
of options and warrants 33,830 182,368 Net
cash used in financing activities (741,264 )
(78,056
)
Net change in cash
(2,299,608
)
849,426 Cash and cash equivalents, beginning of period
8,939,127 7,216,580 Cash and cash equivalents, end of
period $ 6,639,519 $ 8,066,006
Luna Innovations Incorporated
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30, June 30, 2012 2011 2012
2011 (unaudited) (unaudited) Net loss $
(242,520 ) $ (256,654 ) $ (577,268 ) $ (1,281,525 ) Interest
expense 74,357 84,303 154,015 198,725 Income tax expense — — 5,799
10,020 Depreciation and amortization 244,012 382,856
528,113 710,269 EBITDA 75,849 210,505 110,659
(362,511 ) Stock-based compensation and warrant expense
473,930 472,328 940,400 1,314,040
Adjusted EBITDA $ 549,779 $ 682,833 $ 1,051,059 $ 951,529
Luna Innovations (NASDAQ:LUNA)
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