Total revenues increase 8% compared to second
quarter of 2013 and 17% compared to first quarter of 2014
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the second quarter and six months ended
June 30, 2014.
Total revenue for the second quarter of 2014 increased 8%, to
$5.2 million compared to $4.8 million for the second quarter of
2013. Total revenue also increased 17% compared to the first
quarter of 2014. Gross profit improved to $2.0 million, or 38% of
total revenue, for the second quarter of 2014 from $1.8 million, or
37% of total revenue, for the second quarter of 2013. Operating
expenses for the second quarter of 2014 also improved by $0.6
million, or 16%, compared to the second quarter of 2013. With
increased revenues and lower operating expenses, the company's loss
from continuing operations before income taxes of $1.0 million
reflects an improvement of $0.7 million, or 43%, compared to the
second quarter of 2013.
After recognition of discontinued operations, primarily
associated with the sale of the company's medical shape sensing
business in the first quarter of 2014, and income taxes, the
company reported a net loss attributable to common stockholders of
$0.9 million, or $0.06 per diluted common share, for the second
quarter of 2014, compared to a net loss of $1.0 million, or $0.07
per diluted common share, in the same quarter last year. Adjusted
EBITDA, a non-GAAP measure, which is earnings before interest,
taxes, and non-cash expenses of share-based compensation,
depreciation and amortization, improved to $(0.5) million for the
second quarter of 2014, as compared to $(1.1) million for the
second quarter of 2013.
Year to date, total revenue grew 9%, to $9.7 million for the
first half of 2014 compared to $8.9 million for the first six
months of 2013. Products and licensing revenue improved 9%, to $3.8
million for the first half of 2014 compared to $3.5 million in the
first half of 2013. Technology development revenue increased 8%, to
$5.9 million for the first six months of 2014 compared to $5.4
million in the first six months of 2013. Loss from continuing
operations before income taxes for the first half of 2014 improved
$1.0 million, or 27%, compared to the first half of 2013. After
considering income from discontinued operations, which included the
gain on sale of the company’s medical shape sensing business in
2014 and included the gain on sale of the company’s secure
computing assets in addition to the operating contribution of the
shape sensing business in 2013, net income attributable to common
stockholders improved to $7.6 million, or $0.44 per diluted common
share, for the first six months of 2014 compared to $1.8 million,
or $0.11 per diluted common share for the first six months of
2013.
“Our revenue growth and improved bottom line, both year over
year and for sequential quarters, demonstrate the value of our
recent strategic initiatives for our stockholders," said My Chung,
president and chief executive officer. "As we have recently stated,
our primary focus continues to be on fiber optic sensing. By
narrowing the number of key growth initiatives to a single one, we
have been able to grow the business overall while reducing our
expenses and maintaining the stronger balance sheet that resulted
from our two previous strategic transactions. Going forward, we
will continue to focus heavily on the enhancement of our fiber
optic sensing products and the effective marketing of them to drive
growth in future quarters.”
Second Quarter Financial and Business
Summary
- Total revenues grew to $5.2 million in
the second quarter of 2014 compared to $4.8 million in the second
quarter of 2013.
- Technology development revenue
increased by 15%, to $3.2 million, for the second quarter of 2014,
from $2.8 million for the second quarter of 2013.
- Products and licensing revenue was $2.0
million for the second quarter of 2014 flat relative to the second
quarter of 2013, but up 12% compared to the first quarter of
2014.
- Gross profit for the second quarter of
2014 improved to $2.0 million, or 38% of total revenues, compared
to $1.8 million, or 37% of total revenues, for the second quarter
of 2013.
- Selling, general and administrative
expenses decreased by 14% to $2.5 million, or 47% of total revenues
for the second quarter of 2014, from $2.9 million, or 60% of total
revenues, for the second quarter of 2013.
- Total operating expenses decreased to
$3.0 million, or 56% of total revenues, for the second quarter of
2014 from $3.5 million, or 73% of total revenue for the second
quarter of 2013.
- Adjusted EBITDA improved to $(0.5)
million in the second quarter of 2014 from $(1.1) million in the
second quarter of 2013.
- Net loss attributable to common
stockholders for the second quarter of 2014 improved to $0.9
million from $1.0 million for the second quarter of 2013.
- Cash and cash equivalents totaled $14.7
million at June 30, 2014, as compared to $7.8 million at
December 31, 2013 and $10.9 million at March 31, 2014.
During the second quarter of 2014 the company received the second
$6.0 million installment from Intuitive Surgical related to the
sale of the company's medical shape sensing business.
Six Months Ended June 30, 2014
Financial Summary
- Total revenue increased by 9% to $9.7
million for the six months ended June 30, 2014 compared to
$8.9 million for the six months ended June 30, 2013.
- Technology development revenues
increased by 8%, from $5.4 million for the six months ended
June 30, 2013 to $5.9 million for the six months ended
June 30, 2014.
- Products and licensing revenue
increased by 9%, from $3.5 million for the six months ended
June 30, 2013 to $3.8 million for the six months ended
June 30, 2014.
- Gross profit for the six months ended
June 30, 2014 increased by 20%, to $3.5 million, compared to a
gross profit of $3.0 million for the six months ended June 30,
2013. Gross margin percentages increased to 36% of total revenue
for the first six months of 2014 from 33% of total revenue for the
first six months of 2013.
- Selling, general and administrative
expenses decreased to $5.2 million, representing 54% of total
revenues for the six months ended June 30, 2014 compared to
$5.5 million or 62% of total revenues for the six months ended
June 30, 2013.
- Total operating expenses decreased to
$6.5 million, or 67% of total revenues, for the six months ended
June 30, 2014, from $6.9 million or 78% of total revenues, for
the six months ended June 30, 2013.
- Adjusted EBITDA improved to $(2.0)
million for the six months ended June 30, 2014 from $(2.7)
million for the six months ended June 30, 2013.
- Net income attributable to common
stockholders improved to $7.6 million for the six months ended
June 30, 2014, compared to net income attributable to common
stockholders of $1.8 million for the six months ended June 30,
2013 largely the result of a net after-tax gain of $9.4 million
realized on the sale of the company’s medical shape sensing
business in the first quarter of 2014.
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. (EDT) today to discuss its financial
results and business developments for the second quarter of 2014.
The call can be accessed by dialing 877.703.6108
domestically or 857.244.7307 internationally prior to the
start of the call. The participant access code is 30355723.
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 public
company composed of scientists, engineers, and business
professionals developing and manufacturing a new generation of
technologies and products. It has been successful in taking
innovative technologies from applied research to product
development and ultimately to the commercial market, driving
breakthroughs in fields such as aerospace, automotive,
telecommunications, healthcare, energy, and defense.
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 company’s future growth of the
company’s fiber optic sensing products. 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 Balance Sheets June
30,
2014
December 31,
2013
(unaudited) Assets Current assets: Cash and cash
equivalents $ 14,674,973 $ 7,778,541 Accounts receivable, net
5,481,642 5,408,281 Inventory, net 3,314,608 3,346,177 Prepaid
expenses 582,934 708,974 Other current assets 70,207
70,208 Total current assets 24,124,364 17,312,181
Property and equipment, net 1,939,607 2,060,709 Intangible assets,
net 188,816 288,475 Other assets 5,126 42,710
Total assets $ 26,257,913 $ 19,704,075
Liabilities and stockholders’ equity
Liabilities:
Current Liabilities Current portion of long term debt obligation $
1,375,000 $ 1,500,000 Current portion of capital lease obligation
68,640 66,617 Accounts payable 1,520,093 1,401,764 Accrued
liabilities 2,781,931 3,546,585 Deferred credits 391,712
691,424 Total current liabilities 6,137,376
7,206,390 Long-term debt obligation — 625,000 Long-term lease
obligation 75,474 110,307 Total
liabilities 6,212,850 7,941,697 Commitments and contingencies
Stockholders’ equity: Preferred stock 1,322 1,322 Common stock, par
value $ 0.001, 100,000,000 shares authorized, 15,003,901 and
14,527,335 shares issued at June 30, 2014 and December 31, 2013,
respectively 15,299 14,842 Less treasury stock at cost, 22,725
shares at June 30, 2014 and zero at December 31, 2013 (32,221 ) —
Additional paid-in capital 63,503,505 62,756,571 Accumulated
deficit (43,442,842 ) (51,010,357 ) Total
stockholders’ equity 20,045,063 11,762,378
Total liabilities and stockholders’ equity $
26,257,913 $ 19,704,075
Luna
Innovations Incorporated Condensed Consolidated Statements
of Operations Three Months
Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014
2013 (unaudited) (unaudited) Revenue:
Technology development revenue $ 3,219,435 $ 2,807,296 $ 5,894,887
$ 5,434,537 Products and licensing revenue 2,008,862
$ 2,023,668 3,805,291 3,501,795
Total revenue 5,228,297 4,830,964
9,700,178 8,936,332 Cost of revenue:
Technology development costs 2,388,801 2,209,158 4,413,956
4,394,072 Products and license costs 851,490
844,441 1,746,130 1,583,130
Total cost of revenue 3,240,291 3,053,599
6,160,086 5,977,202 Gross Profit
1,988,006 1,777,365 3,540,092
2,959,130 Operating expense: Selling, general
and administrative 2,466,626 2,875,461 5,221,704 5,538,569
Research, development and engineering 484,509
641,790 1,233,663 1,401,781
Total operating expense 2,951,135 3,517,251
6,455,367 6,940,350 Operating
loss (963,129 ) (1,739,886 ) (2,915,275 )
(3,981,220 ) Other income/(expense): Other income, net
29,325 94,990 111,431 193,144 Interest expense (27,302 )
(49,781 ) (59,667 ) (107,960 ) Total other
income 2,023 45,209 51,764
85,184 Loss from continuing operations before
income taxes (961,106 ) (1,694,677 ) (2,863,511 ) (3,896,036 )
Income tax (benefit)/expense (375,983 ) (659,341 )
(1,145,173 ) (1,541,768 ) Loss from continuing
operations (585,123 ) (1,035,336 ) (1,718,338
) (2,354,268 ) Gain on sale, net of $0.4 million, $0.3
million, $1.3 million and $1.3 million of related income taxes,
respectively (330,716 ) (364,338 ) 9,370,799 3,682,159 Operating
(loss)/ income from discontinued operations, net of $0.0, $0.3
million, $0.0 million and $0.3 million related income tax,
respectively — 447,592 (28,076 )
505,624 Discontinued operations, net of tax
(330,716 ) 83,254 9,342,723
4,187,783 Net (loss)/income (915,839 ) (952,082 ) 7,624,385
1,833,515 Preferred stock dividend 27,334
26,366 56,870 49,995 Net
(loss)/income attributable to common stockholders $ (943,173 ) $
(978,448 ) $ 7,567,515 $ 1,783,520 Net loss per share
from continuing operations: Basic $ (0.04 ) $ (0.07 ) $ (0.12 ) $
(0.17 ) Diluted $ (0.04 ) $ (0.07 ) $ (0.12 ) $ (0.17 ) Net
(loss)/income per share from discontinued operations: Basic $ (0.02
) $ 0.01 $ 0.63 $ 0.29 Diluted $ (0.02 ) $ — $ 0.54 $
0.25 Net (loss)/income per share attributable to common
stockholders: Basic $ (0.06 ) $ (0.07 ) $ 0.51 $ 0.13 Diluted $
(0.06 ) $ (0.07 ) $ 0.44 $ 0.11 Weighted average
common shares and common equivalent shares outstanding: Basic
14,817,084 14,362,494 14,722,474 14,206,598 Diluted 14,817,084
16,723,796 17,201,639 16,558,246
Luna Innovations
Incorporated Condensed Consolidated Statements of Cash
Flows Six months ended
June 30,
2014 2013 (unaudited) Cash
used in operating activities Net income $ 7,624,385 $ 1,833,515
Adjustments to reconcile net income (loss) to net cash used in
operating activities Depreciation and amortization 336,564 489,244
Share-based compensation 488,593 618,084 Warrant expense — — Gain
on sale of discontinued operations, net of income taxes (9,370,799
) (3,868,114 ) Allowance for doubtful accounts or bad debt expense
— 124,810 Tax benefit from utilization of net operating loss
carryforward (1,163,301 ) (1,021,538 ) Change in assets and
liabilities: Accounts receivable (73,857 ) 834,122 Inventory (6,796
) (309,217 ) Other current assets 72,141 (40,647 ) Other assets
37,584 72,584 Accounts payable and accrued expenses (761,149 )
174,916 Deferred credits (299,712 ) (221,553 ) Net
cash used in operating activities (3,116,347 )
(1,313,794 )
Cash flows used in investing activities
Acquisition of property and equipment (135,136 ) (69,108 )
Intangible property costs (138,118 ) (145,858 ) Proceeds from sale
of discontinued operations, net of fees 10,927,268
4,522,460 Net cash provided by/(used in) investing
activities 10,654,014 4,307,494
Cash
flows used in financing activities Payments on capital lease
obligations (32,810 ) (26,641 ) Payment of debt obligations
(750,000 ) (625,000 ) Purchase of treasury stock (32,221 ) —
Proceeds from the exercise of options and warrants 173,796
60,349 Net cash used in financing activities
(641,235 ) (591,292 )
Net increase in cash or cash
equivalents 6,896,432 2,402,408 Cash and cash equivalents,
beginning of period 7,778,541 6,340,461
Cash and cash equivalents, end of period $ 14,674,973 $
8,742,869
Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted
EBITDA Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014
2013 (unaudited) (unaudited) Net income/(loss)
$ (915,839 ) $ (952,082 ) $ 7,624,385 $ 1,833,515 Less
(loss)/income from discontinued operations, net of income taxes
(330,716 ) 83,254 9,342,723
4,187,783
Loss from continuing operations (585,123 ) (1,035,336 )
(1,718,338 )
(2,354,268
) Interest expense 27,302 49,781 59,667 107,960 Tax (benefit)
expense (375,983 ) (659,341 ) (1,145,173 ) (1,541,768 )
Depreciation and amortization 134,259 260,979
336,564 489,244 EBITDA (799,545
) (1,383,917 ) (2,467,280 )
(3,298,832
) Share-based compensation 257,654 304,568 488,593 618,084 Adjusted
EBITDA $ (541,891 ) $ (1,079,349 ) $ (1,978,687 ) $
(2,680,748
)
Luna Innovations IncorporatedInvestor Contact:Dale
Messick, CFOPhone: 1.540.769.8400Email: IR@lunainc.com
Luna Innovations (NASDAQ:LUNA)
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