Adjusted EBITDA of $0.4 million for the fourth
quarter of 2015 versus $(0.2) million for the fourth quarter of
2014
Net income of $7.9 million for the fourth
quarter of 2015 versus net loss of $(0.9) million for the fourth
quarter of 2014
Adjusted EBITDA of $1.0 million for the full
year 2015 versus $(2.5) million for 2014
Net income of $2.3 million for the full year
2015 versus $6.0 million for 2014
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the fourth quarter and year ended December
31, 2015.
Following the company's merger with Advanced Photonix, Inc.
("API") in May 2015, adjusted earnings before interest, taxes,
depreciation and amortization ("adjusted EBITDA") improved to $0.4
million for the quarter ended December 31, 2015 compared to an
adjusted EBITDA loss of $(0.2) million for the quarter ended
December 31, 2014. Adjusted EBITDA is reconciled to net income or
loss for the respective period within the tables included in this
release. Revenues increased to $15.5 million for the three months
ended December 31, 2015 compared to $6.2 million for the three
months ended December 31, 2014. After the realization of an $8.3
million gain associated with the receipt in December 2015 of the
final payments earned with respect to the company's sale of its
medical shape sensing technology in 2014, the company recognized
net income attributable to common stockholders of $7.9 million for
the three months ended December 31, 2015, compared to a net loss
attributable to common stockholders of $(0.9) million for the three
months ended December 31, 2014.
“The combination of our overall growth from merging with API
earlier this year plus a significantly stronger balance sheet
resulting from the $9.0 million payment from Intuitive Surgical in
December leaves us well-positioned for executing our growth
strategy as we head into 2016,” said My Chung, president and chief
executive officer. “Our recently announced order for avalanche
photodiodes demonstrates our ability to participate in the growing
fiber to the premise market, which was a significant factor in our
decision to merge with API last year. We have been successful in
capturing many of the operating synergies we expected to achieve
following the merger, and we believe the combination of those
synergies with the expected growth in our fiber optic products
should lead to continued improving financial results in 2016."
Fourth Quarter Financial
Highlights
Total revenues for the three months ended December 31, 2015 were
$15.5 million, compared to $6.2 million for the three months ended
December 31, 2014. Total revenues of $15.5 million included $8.8
million of revenue from the operations of API for the fourth
quarter of 2015. Product and licensing revenue grew to $11.7
million for the three months ended December 31, 2015, compared to
$2.9 million for the three months ended December 31, 2014. On a pro
forma basis, this represented a 34% growth in product and licensing
revenue compared to the combined revenues of Luna and API for the
three months ended December 31, 2014. Technology development
revenues increased to $3.7 million for the three months ended
December 31, 2015 compared to $3.2 million for the three months
ended December 31, 2014.
With the inclusion of API operating results in the fourth
quarter of 2015, gross profit increased to $5.0 million, or 33% of
total revenue, for the three months ended December 31, 2015,
compared to gross profit of $2.2 million, or 36% of total revenue,
for the three months ended December 31, 2014. The decline in gross
margin resulted from product mix in the fourth quarter of 2015,
principally due to a larger volume of sales of integrated coherent
receivers, which typically carry a lower gross margin than do sales
of Luna's historical instruments.
Selling, general and administrative expenses increased to $4.2
million for the three months ended December 31, 2015, compared to
$2.7 million for the three months ended December 31, 2014. Selling,
general and administrative expenses included $0.5 million of
amortization expense associated with the step-up in bases of the
API assets acquired in the merger. In addition to this amortization
expense, the selling, general and administrative expenses
associated with the operations of API were $1.1 million for the
fourth quarter of 2015. Research, development and engineering
expenses increased to $1.6 million for the three months ended
December 31, 2015 compared to $0.4 million for the three months
ended December 31, 2014, reflecting $1.1 million of research and
development expense associated with the operations of API for the
fourth quarter of 2015.
After tax, Luna recognized a loss from continuing operations of
$(0.4) million for the three months ended December 31, 2015
compared to a loss from continuing operations of $(1.2) million for
the three months ended December 31, 2014.
Income from discontinued operations was $8.3 million for the
three months ended December 31, 2015, compared to income from
discontinued operations of $0.3 million for the three months ended
December 31, 2014. Discontinued operations for the 2015 period
represents the payment received in December 2015 to settle all
remaining obligations associated with future technical milestone
achievement and royalties related to the sale of Luna's medical
shape sensing business sold to Intuitive Surgical in January
2014.
With the income from discontinued operations, Luna recognized
net income attributable to common stockholders for the three months
ended December 31, 2015 of $7.9 million, compared to net loss
attributable to common stockholders of $(0.9) million for the three
months ended December 31, 2014. Adjusted EBITDA improved $0.6
million, to $0.4 million for the three months ended December 31,
2015, compared to an adjusted EBITDA loss of $(0.2) million for the
three months ended December 31, 2014.
Cash and cash equivalents improved to $17.5 million as of
December 31, 2015, compared to $7.1 million as of September 30,
2015, and $14.1 million at December 31, 2014. The increase in cash
resulted from the $9.0 million payment from Intuitive Surgical,
$1.0 million additional proceeds under Luna's debt agreement with
SVB to fund future capital expenditures, and $0.4 million positive
cash flow associated with Luna's ongoing business activities in the
fourth quarter of 2015.
Full Year 2015 Financial
Highlights
Total revenues were $44.0 million for the year ended December
31, 2015, compared to $21.3 million for the year ended December 31,
2014. Revenues for 2015 included $20.6 million of revenue
associated with the operations of API for the period from the
closing of the merger on May 8, 2015 through December 31, 2015.
Products and licensing revenues increased to $30.4 million for the
year ended December 31, 2015, compared to $9.1 million for the year
ended December 31, 2014. Technology development revenues increased
to $13.6 million for the year ended December 31, 2015 compared to
$12.2 million for the year ended December 31, 2014.
Gross profit for 2015 increased to $16.5 million, or 37% of
total revenue, compared to gross profit of $7.8 million, or 37% of
total revenue, for 2014.
Selling, general and administrative expenses increased to $18.5
million for the year ended December 31, 2015, compared to $10.3
million for the year ended December 31, 2014. The increase in
selling, general and administrative expenses includes an increase
of $3.5 million in transaction related expenses incurred in 2015
versus 2014, $1.1 million in amortization expense associated with
the step-up in bases of the assets acquired in the merger with API,
and $3.1 million in other selling, general and administrative
expenses associated with the operations of API for the period from
the closing of the merger on May 8, 2015 through December 31,
2015.
Research, development and engineering expenses increased to $4.3
million for the year ended December 31, 2015, compared to $2.1
million for the year ended December 31, 2014. Research, development
and engineering expenses in 2015 include $2.5 million associated
with the operations of API for the period from the closing of the
merger with API on May 8, 2015 through December 31, 2015.
The $3.5 million increase in transaction related expenses in
2015 compared to 2014 in addition to the $1.1 million amortization
of intangible assets associated with the step-up in bases of the
API assets acquired in the merger contributed to a $1.7 million
increase in Luna's operating loss for 2015 compared to 2014. For
the year ended December 31, 2015, Luna's operating loss was $6.2
million, compared to an operating loss of $4.5 million for the year
ended December 31, 2014.
Income from discontinued operations was $8.3 million for the
year ended December 31, 2015, compared to $9.3 million for the year
ended December 31, 2014. Income from discontinued operations in
each of these years related primarily to the after-tax gain
recognized in the respective year for the sale of Luna's medical
shape sensing business to Intuitive Surgical in January 2014.
Proceeds from this sale included $12.0 million paid to Luna in 2014
and an additional $9.0 million paid to us in December 2015.
Net income attributable to common stockholders was $2.2 million
for the year ended December 31, 2015, compared to net income
attributable to common stockholders of $5.9 million for the year
ended December 31, 2014. Adjusted EBITDA improved $3.5 million, to
$1.0 million for the year ended December 31, 2015 compared to an
adjusted EBITDA loss of $(2.5) million for the year ended December
31, 2014.
Non-GAAP Measures
In evaluating the operating performance of its business, Luna’s
management considers Adjusted EBITDA, which excludes certain
charges and credits that are required by generally accepted
accounting principles (“GAAP”). Adjusted EBITDA provides useful
information to both management and investors by excluding the
effect of certain non-cash expenses and 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. Adjusted EBITDA should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results. Adjusted EBITDA has
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 fourth quarter of 2015
and the full year. The call can be accessed by dialing
855.236.2056 domestically or 267.753.2162 internationally
prior to the start of the call. The participant access code is
73296021. 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) develops high
speed optics and high performance fiber optic test products that
provide unique capabilities for the aerospace, automotive, energy,
defense, and telecommunications industries. Luna develops,
manufactures and markets high definition fiber optic sensing
(HD-FOS) products and fiber optic test and measurement
instrumentation, and packages optoelectronic semiconductors into
high-speed optical receivers (HSOR products), custom optoelectronic
subsystems (Optoelectronics products) and Terahertz (THz)
instrumentation. Luna is organized into two business segments,
which work closely together to turn ideas into products: a
Technology Development segment and a Products and Licensing
segment. Luna's business model is designed to accelerate the
process of bringing new and innovative technologies to market.
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
the company's expectations regarding the company’s future financial
performance, the value of operating synergies following the merger
with API, and the potential demand for the company's 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, integration or other
operational issues related to the merger, technological challenges
and those risks and uncertainties set forth in the company’s
periodic reports and other filings with the Securities and Exchange
Commission ("SEC"). Such filings are available on the SEC’s website
at www.sec.gov and on 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
Consolidated Statements of
Operations
Three months ended December 31,
Years ended December 31, 2015
2014 2015 2014
(unaudited) (unaudited) Revenues: Technology development revenues $
3,717,820 $ 3,243,980 $ 13,599,048 $ 12,205,889 Products and
licensing revenues 11,732,459
2,945,302 30,421,310
9,054,101 Total revenues 15,450,279
6,189,282 44,020,358
21,259,990 Cost of revenues: Technology
development costs 3,159,858 2,583,424 10,378,616 9,376,485 Products
and licensing costs 7,254,523
1,392,580 17,141,079
4,046,885 Total cost of revenues 10,414,381
3,976,004 27,519,695
13,423,370 Gross profit
5,035,898 2,213,278
16,500,663 7,836,620 Operating
expense: Selling, general and administrative 4,209,480 2,702,335
18,481,270 10,253,847 Research, development, and engineering
1,641,783 380,684
4,268,988 2,087,874 Total
operating expense 5,851,263
3,083,019 22,750,258
12,341,721 Operating loss (815,365 )
(869,741 ) (6,249,595 )
(4,505,101 ) Other (expense)/income: Other income, net (4,769 ) 21
(9,967 ) 111,452 Interest expense, net (83,882 )
(15,287 ) (220,403 )
(96,229 ) Total other (expense)/ income, net (88,651 )
(15,266 ) (230,370 )
15,223 Loss from continuing operations before income
taxes (904,016 ) (885,007 ) (6,479,965 ) (4,489,878 ) Income tax
(benefit)/expense (489,709 ) 282,654
(470,605 ) (1,137,228 ) Loss
from continuing operations (414,307 ) (1,167,661 ) (6,009,360 )
(3,352,650 ) Operating loss from discontinued operations, net of
$0.0 million of related income taxes in each period — (6,364 ) —
(34,491 ) Gain on sale, net of $0.7 million, $(0.3) million, $0.7
million, and $1.3 million of related income taxes 8,328,790
288,680 8,326,386
9,381,948 Income from discontinued
operations, net of income taxes 8,328,790
282,316 8,326,386
9,347,457 Net income/(loss) 7,914,483 (885,345 )
2,317,026 5,994,807 Preferred stock dividend 21,012
28,567 85,830
112,197 Net income/(loss) attributable to
common stockholders $ 7,893,471 $ (913,912 ) $
2,231,196 $ 5,882,610 Net loss per
share from continuing operations: Basic and diluted $ (0.02 ) $
(0.08 ) $ (0.26 ) $ (0.23 ) Net income per share from discontinued
operations: Basic and diluted $ 0.30 $ 0.02 $ 0.36 $ 0.63 Net
income/(loss) per share attributable to common stockholders: Basic
and diluted $ 0.29 $ (0.06 ) $ 0.10 $ 0.40 Weighted average shares:
Basic and diluted 27,464,993 14,485,882 23,026,494 14,880,697
Luna Innovations Incorporated
Consolidated Balance Sheets
December 31, 2015
December 31, 2014 (unaudited)
Assets Current assets:
Cash and cash equivalents $ 17,464,040 $ 14,116,969 Accounts
receivable, net 11,034,557 5,689,615 Inventory, net 8,863,167
3,364,233 Prepaid expenses 1,388,439 715,302
Total current assets 38,750,203 23,886,119 Property and
equipment, net 6,614,238 3,497,057 Intangible assets, net
10,404,312 199,277 Goodwill 2,274,112 — Other assets 88,948
1,995
Total assets $
58,131,813 $ 27,584,448
Liabilities and stockholders’ equity Current Liabilities:
Current portion of long term debt obligation 1,833,333 625,000
Current portion of capital lease obligation 31,459 70,725 Accounts
payable 4,054,425 1,447,177 Accrued liabilities 8,302,809 5,468,849
Deferred revenue 1,109,759 861,081
Total current liabilities 15,331,785 8,472,832 Long-term deferred
rent 1,564,229 1,570,377 Long-term debt obligation 4,291,667 —
Long-term capital lease obligation 35,237
39,582
Total liabilities 21,222,918
10,082,791 Commitments and
contingencies Stockholders’ equity: Preferred stock, par value
$0.001, 1,321,514 shares authorized, issued and outstanding at
December 31, 2015 and 2014 1,322 1,322 Common stock, par value
$0.001, 100,000,000 shares authorized, 27,644,833 and 15,110,924
shares issued, 27,477,181 and 15,088,199 shares outstanding at
December 31, 2015 and 2014, respectively 28,178 15,541 Treasury
stock at cost, 167,652 shares at December 31, 2015 and 22,725
shares at December 31, 2014 (184,934 ) (32,221 ) Additional paid-in
capital 81,461,907 64,147,666 Accumulated deficit
(44,397,578 ) (46,630,651 )
Total stockholders’
equity 36,908,895 17,501,657
Total liabilities and stockholders’ equity $
58,131,813 $ 27,584,448
Luna Innovations Incorporated
Consolidated Statements of Cash
Flows
Years ended December 31,
2015 2014 (unaudited)
Cash flows used in operating activities: Net income $
2,317,026 $ 5,994,807 Adjustments to reconcile net income to net
cash used in operating activities: Depreciation and amortization
2,457,032 607,693 Stock-based compensation 1,124,379 1,019,445 Gain
on sale of discontinued operations, net of income taxes (8,326,386
) (9,381,948 ) Allowance for doubtful accounts or bad debt expense
10,375 — Tax benefit from utilization of loss from current year
operations (510,772 ) (1,148,941 ) Changes in operating assets and
liabilities: Accounts receivable (2,040,323 ) (281,334 ) Inventory
(252,934 ) (56,421 ) Other assets (131,411 ) 50,696 Accounts
payable and accrued expenses 16,429 311,627 Deferred credits
248,678 169,657 Net cash used in
operating activities (5,087,907 )
(2,714,719 )
Cash flows provided by investing activities:
Acquisition of property and equipment (710,348 ) (255,242 )
Intangible property costs (367,050 ) (252,083 ) Cash acquired in
business combination 374,517 — Proceeds from sale of discontinued
operations, net 8,997,595
10,927,268 Net cash provided by investing activities
8,294,714 10,419,943
Cash
flows provided by/(used in) financing activities: Payments on
debt obligations (6,712,355 ) (1,500,000 ) Payments on capital
lease obligation (77,184 ) (66,617 ) Purchase of treasury stock
(152,713 ) (32,221 ) Borrowings under term loans 7,000,000 —
Proceeds from the exercise of options and warrants 82,516
232,042 Net cash provided
by/(used in) financing activities 140,264
(1,366,796 )
Net change in cash and cash
equivalents 3,347,071 6,338,428 Cash and cash
equivalents—beginning of period 14,116,969
7,778,541 Cash and cash equivalents—end of
period $ 17,464,040 $ 14,116,969
Supplemental disclosure of cash flow information Cash paid
for interest $ 187,017 $ 87,354 Dividend on preferred stock, 79,292
shares of common stock issuable for each of the years ended
December 31, 2015 and 2014, respectively 85,830 112,197 Cash paid
for income taxes $ 40,167 $ 150,000
Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to
EBITDA and Adjusted EBITDA
Three months endedDecember 31, Year endedDecember 31,
2015 2014 2015
2014 (unaudited) (unaudited) Net income/(loss)
$ 7,914,483 $ (885,345 ) $ 2,317,026 $ 5,994,807 Less income from
discontinued operations, net of income taxes 8,328,790
282,316 8,326,386
9,347,457 Net loss from continuing
operations (414,307 ) (1,167,661 ) (6,009,360 ) (3,352,650 )
Interest expense 83,882 15,287 220,403 96,229 Tax benefit (489,709
) 282,654 (470,605 ) (1,137,228 ) Depreciation and amortization
908,224 127,792
2,457,032 607,693 EBITDA 88,090
(741,928 ) (3,802,530 ) (3,785,956 ) Share-based compensation
277,714 450,861 1,124,379 1,019,445 Transaction costs 54,840
125,489 3,704,019
242,762 Adjusted EBITDA $ 420,644
$ (165,578 ) $ 1,025,868
$ (2,523,749 )
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version on businesswire.com: http://www.businesswire.com/news/home/20160322006502/en/
Luna Innovations IncorporatedInvestor Contact:Dale
Messick, CFO, 1.540.769.8400IR@lunainc.com
Luna Innovations (NASDAQ:LUNA)
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