Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the third quarter and nine months ended
September 30, 2012.
For the three months ended September 30, 2012, the Company
reported a net loss attributable to common stockholders of $0.3
million compared to net income to common stockholders of $0.2
million for the third quarter of 2011.
Total revenues decreased by 9%, from $8.8 million in the third
quarter of 2011 to $8.0 million in the third quarter of 2012.
Products and licensing revenues increased by 18%, from $2.7 million
in the third quarter of 2011 to $3.2 million in the third quarter
of 2012, due to increased sales of the Company’s new ODiSI product
line. Revenues in the Company’s technology development segment
declined by 21% from $6.2 million in the third quarter of 2011 to
$4.9 million in the third quarter of 2012, primarily due to lower
revenues in the Company’s Secure Computing and Communications
group, where several short-term projects benefitted the group’s
third quarter 2011 revenues. Gross profit decreased from $3.5
million for the third quarter of 2011 to $3.1 million for the third
quarter of 2012.
Adjusted EBITDA, a non-GAAP measure, which is earnings before
interest, taxes, and non-cash expenses of share-based compensation,
depreciation, amortization and warrant expense, declined to $0.7
million for the third quarter of 2012, as compared to $1.1 million
for the third quarter of 2011. Cash at September 30, 2012 of $6.7
million represents an increase of $0.1 million from $6.6 million at
June 30, 2012.
“I am pleased with the successes we continue to make on each of
our key strategic growth initiatives,” said My Chung, president and
chief executive officer. “In addition to our continuing progress in
our fiber optic shape sensing and secure computing initiatives, the
introduction of our ODiSI line of products for strain measurement
earlier this year drove the incremental products and licensing
revenues we generated this quarter. We are encouraged that our
customers are embracing our technology and remain optimistic that
the growing composite test market will continue to provide
diversity in our revenue sources.”
Third Quarter Financial and Business
Summary
-- Total revenues decreased by 9%, to $8.0 million for the third
quarter of 2012, from $8.8 million for the third quarter of
2011.
-- Products and licensing revenues increased by 18%, to $3.2
million in the third quarter of 2012, from $2.7 million in the
third quarter of 2011.
-- Technology development revenues decreased by 21%, to $4.9
million for the third quarter of 2012, from $6.2 million for the
third quarter of 2011.
-- Gross profit decreased to $3.1 million, or 39% of total
revenues, for the third quarter of 2012, from $3.5 million, or 40%
of total revenues, for the third quarter of 2011.
-- Selling, general and administrative expenses increased by 16%
to $2.7 million, or 33% of total revenues for the third quarter of
2012, from $2.3 million, or 26% of total revenues, for the third
quarter of 2011.
-- Total operating expenses increased to $3.3 million, or 41% of
total revenues, for the third quarter of 2012, from $3.2 million,
or 36% of total revenues for the third quarter of 2011.
-- Adjusted EBITDA decreased to $0.7 million for the third
quarter of 2012, from $1.1 million for the third quarter of
2011.
-- Net loss attributable to common stockholders declined to $0.3
million, or a loss of $0.02 per basic and diluted common share, for
the third quarter of 2012, compared to a net income attributable to
common stockholders of $0.2 million, or income of $0.02 per basic
common share and $0.01 per diluted common share, for the third
quarter of 2011.
-- Cash and cash equivalents totaled $6.7 million at September
30, 2012, as compared to $6.6 million at June 30, 2012 and $8.9
million at December 31, 2011.
--Introduced a new lower cost optical backscatter reflectometer,
the OBR 5T-50, expanding our product offering in the fiber-optic
testing market by directly addressing the needs of manufacturing
production lines, as well as university labs and research
facilities.
--Received full accreditation by the U.S. Department of Defense
as a Trusted Integrated Circuit Supplier through our Secure
Computing and Communications group.
Nine Months Ended September 30, 2012
Financial Summary
-- Total revenues decreased $2.9 million, or 10%, to $24.6
million for the nine months ended September 30, 2012, compared to
$27.5 million for the nine months ended September 30, 2011.
-- Products and licensing revenues decreased by 13%, to $8.7
million for the nine months ended September 30, 2012, from $10.1
million for the nine months ended September 30, 2011.
-- Technology development revenues decreased by 9%, to $15.9
million for the nine months ended September 30, 2012, from $17.4
million for the nine months ended September 30, 2011.
-- Gross profit decreased by 9%, to $9.5 million for the nine
months ended September 30, 2012, from $10.5 million for the nine
months ended September 30, 2011.
-- Selling, general and administrative expenses decreased by 12%
to $8.2 million, or 33% of total revenues, for the nine months
ended September 30, 2012, from $9.3 million, or 34% of total
revenues, for the nine months ended September 30, 2011.
-- Total operating expenses decreased by 10% to $10.2 million,
or 41% of total revenues, for the nine months ended September 30,
2012, from $11.3 million, or 41% of total revenues, for the nine
months ended September 30, 2011.
-- Adjusted EBITDA decreased to $1.7 million for the nine months
ended September 30, 2012, from $2.1 million for the nine months
ended September 30, 2011.
-- Net loss attributable to common stockholders improved to $0.9
million, or a loss of $0.06 per basic and diluted common share, for
the nine months ended September 30, 2012, compared to a net loss
attributable to common stockholders of $1.1 million, or a loss of
$0.08 per basic and diluted common share, for the nine months ended
September 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 will conduct an investor
conference call at 5:00 p.m. (EST) today to discuss its financial
results and business developments for the third quarter of 2012 and
expectations for the remainder of 2012. The call can be accessed by
dialing 866.700.7101 domestically or 617.213.8837
internationally prior to the start of the call. The participant
access code is 19063914. 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 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.lunainc.com. The statements made in this release are based on
information available to the company 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 Condensed
Consolidated Statements of Operations
Three Months Ended Nine Months Ended September
30, September 30, 2012 2011 2012
2011 (unaudited) (unaudited) Revenues:
Technology development revenues $ 4,874,826 $ 6,161,826 $
15,868,642 $ 17,406,515 Products and licensing revenues
3,155,953 2,681,184 8,715,630 10,058,709
Total revenues 8,030,779 8,843,010 24,584,272
27,465,224 Cost of revenues: Technology development costs
3,577,476 3,630,163 11,248,453 11,910,771 Products and licensing
costs 1,307,285 1,719,039 3,821,980
5,059,507 Total cost of revenues 4,884,761
5,349,202 15,070,433 16,970,278
Gross Profit 3,146,018 3,493,808 9,513,839 10,494,946 Operating
expense: Selling, general and administrative 2,665,454
2,303,325 8,183,632 9,340,545 Research, development, and
engineering 654,566 877,741 1,968,877
1,950,275 Total operating expense 3,320,020
3,181,066 10,152,509 11,290,820
Operating (loss)/income
(174,002
)
312,742 (638,670 ) (795,874 ) Other income/(expense): Other
income, net 37,866 21,953 85,083 57,793 Interest expense
(68,455 ) (91,908 ) (222,473 ) (290,634 )
Total other income/(expense) (30,589 )
(69,955 ) (137,390 ) (232,841 )
Income/(Loss) before income taxes
(204,591
)
242,787 (776,060 ) (1,028,715 ) Income tax expense 15,618
287 21,417 10,307 Net
(loss)/income
(220,209
)
242,500 (797,477 ) (1,039,022 ) Preferred stock dividend
34,095 20,616 94,974 94,952
Net (loss)/income attributable to common stockholders $
(254,304
)
$ 221,884 $ (892,451 ) $ (1,133,974 ) Net
(loss)/income per share: Basic $
(0.02
)
$ 0.02 $ (0.06 ) $ (0.08 ) Diluted $
(0.02
)
$ 0.01 $
(0.06
)
$
(0.08
)
Weighted average shares: Basic 13,939,938 13,669,724
13,903,809 13,598,249 Diluted 13,939,938 15,898,639 13,903,809
13,598,249
Luna Innovations
Incorporated Condensed Consolidated Balance Sheets
September 30, December 31, 2012
2011 (unaudited) Assets Current assets: Cash and cash
equivalents $ 6,722,311 $ 8,939,127 Accounts receivable, net
7,729,108 5,958,086 Inventory, net 3,569,999 3,330,773 Prepaid
expenses 962,612 1,071,438 Other current assets 36,717
35,717 Total current assets 19,020,747
19,335,141 Property and equipment, net 2,470,723 2,816,674
Intangible assets, net 449,477 539,563 Other assets 171,668
228,043 Total assets $ 22,112,615 $ 22,919,421
Liabilities and stockholder’s equity Liabilities: Current
Liabilities: Current portion of long term-debt obligation 1,625,000
1,625,000 Current portion of capital lease obligation 53,288 50,949
Accounts payable 2,357,536 1,656,602 Accrued liabilities 2,927,932
3,612,193 Deferred credits 1,103,353 1,462,603
Total current liabilities 8,067,109 8,407,347 Long-term debt
obligation 2,500,000 3,625,000 Long-term lease obligation 142,745
183,008 Total liabilities
10,709,854 12,215,355 Commitments and contingencies
Stockholders’ equity: Preferred stock 1,322 1,322 Common stock
14,221 13,969 Additional paid-in capital 60,880,410 59,289,516
Accumulated deficit (49,493,192 ) (48,600,741 )
Total stockholders’ equity 11,402,761
10,704,066 Total liabilities and stockholders’ equity $
22,112,615 $ 22,919,421
Luna Innovations Incorporated
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2012
2011 (unaudited) Cash flows (used in)/provided by
operating activities Net loss $ (797,477 ) $ (1,039,022 )
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 814,498 1,042,700
Share-based compensation 1,411,672 1,737,220 Warrant expense 52,889
41,752 Changes in assets and liabilities: Accounts receivable
(1,771,022 ) (239,167 ) Inventory (243,565 ) (463,666 ) Other
current assets 107,826 (174,249 ) Other assets 56,375 56,375
Accounts payable and accrued expenses (36,216 ) (223,648 ) Deferred
credits (359,250 ) (174,040 ) Net cash
(used in)/provided by operating activities
(764,270
)
564,255
Cash flows used in investing
activities Acquisition of property and equipment (242,396 )
(289,777 ) Intangible property costs (131,727 )
(272,741 ) Net cash used in investing activities
(374,123 ) (562,518 )
Cash flows
used in financing activities Payments on capital lease
obligations (37,924 ) (30,115 ) Proceeds from debt obligations --
6,000,000 Payment of debt obligations (1,125,000 ) (6,617,393 )
Proceeds from the exercise of options and warrants 84,501
262,641 Net cash used in financing activities
(1,078,423 ) (384,867 )
Net change in
cash (2,216,816 ) (383,130 ) Cash and cash
equivalents—beginning of period 8,939,127
7,216,580 Cash and cash equivalents—end of period $
6,722,311 $ 6,833,450
Luna Innovations
Incorporated Reconciliation of Net Income (Loss) to EBITDA
and Adjusted EBITDA Three
Months Ended Nine Months Ended September 30,
September 30, 2012 2011 2012
2011 (unaudited) (unaudited) Reconciliation of
Net Income (Loss) to EBITDA and Adjusted EBITDA: Net income
(loss) $
(220,209
)
$ 242,500 $ (797,477 ) $ (1,039,022 ) Interest expense
68,455 91,908 222,473 290,634 Income tax expense 15,618 287 21,417
10,307 Depreciation and amortization 286,386 332,432
814,498 1,042,700 EBITDA 150,250 667,127
260,911 304,619 Stock-based compensation and warrant expense
524,161 462,073 1,464,561 1,778,972
Adjusted EBITDA $ 674,411 $ 1,129,200 $ 1,725,472 $
2,083,591
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