Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced optical technology, today reported record financial
results for the three and six months ended June 30, 2018.
- Fifth consecutive quarter of
year-over-year revenue growth and positive net income from
continuing operations
- Total revenues of $13.8 million for the
three months ended June 30, 2018, up 22% compared to the three
months ended June 30, 2017
- Net income improved significantly to
$1.1 million for the three months ended June 30, 2018, compared to
$(0.2) million for the prior-year fiscal quarter
- Adjusted EBITDA improved to $1.3
million for the three months ended June 30, 2018 compared to $0.6
million for the prior-year fiscal quarter
Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") is a non-GAAP financial metric
used by management to measure operating performance. This term is
defined elsewhere in this release. Please see schedules appearing
later in this release for reconciliation of non-GAAP financial
measures to the most directly comparable GAAP measures.
“I’m very proud of the Luna team for driving the businesses to
another strong quarter of growth,” said Scott Graeff, President and
Chief Executive Officer of Luna. “The double-digit revenue
percentage increases we saw across our business segments led to
strong revenue growth year-over-year, and we achieved positive net
income from continuing operations for a record fifth consecutive
quarter.”
In a separate release issued today, Luna also announced it has
sold its Optoelectronic Solutions business to OSI Optoelectronics,
Inc. a subsidiary of OSI Systems, Inc., a leader in the development
and manufacture of optoelectronic OEM and custom solutions for
leading technologies and industries.
“As we’ve mentioned previously, we are well positioned to drive
growth in Luna’s core fiber optic-based test and measurement
business to better serve this rapidly expanding market, which is
projected to grow to more than $9 billion by 2025,” Graeff
continued. “Divesting our Optoelectronics Solutions business to an
industry leader such as OSI allows us to focus on our core
strengths and competitive advantages, as well as underscores our
overall reputation for technological excellence. Culturally, the
divestiture is a great fit with OSI, and we thank all of the
Optoelectronic Solutions employees for their many contributions
while they were part of the Luna team.”
Second-Quarter and Six-Month Financial
Summary
Total revenues for the three months ended June 30, 2018 were
$13.8 million compared to $11.3 million for the three months ended
June 30, 2017. Technology development revenues increased 19% to
$5.5 million for the three months ended June 30, 2018, compared to
$4.6 million for the three months ended June 30, 2017. Total
products and licensing revenues increased 24% to $8.3 million for
the three months ended June 30, 2018, compared to $6.7 million for
the three months ended June 30, 2017. The increase in the products
and licensing revenues for the three months ended June 30, 2018
compared to the three months ended June 30, 2017 was partially due
to a 146% increase in sensing equipment, which includes Luna's
ODiSI products. The increase in technology development revenues for
the three months ended June 30, 2018 compared to the prior-year
period was due to continued growth in government research in
advancing optical and bio-medical technologies and Luna's success
in winning these research contracts.
Gross profit was $5.7 million, or 41% of revenues, for the three
months ended June 30, 2018, compared to gross profit of $4.4
million, or 39% of revenues, for the three months ended June 30,
2017.
Selling, general and administrative ("SG&A") expenses were
$3.8 million for the three months ended June 30, 2018, compared to
$3.4 million for the three months ended June 30, 2017. Research,
development and engineering ("R&D") expenses were $1.0 million
for the three months ended June 30, 2018, compared to $0.8 million
for the three months ended June 30, 2017. The increase in SG&A
and in R&D expenses were due partially to the hiring of
additional sales and marketing professionals as well as engineers
in the Lightwave division, Luna's fiber optic test and measurement
business.
Net income from continuing operations improved to $1.1 million
for the three months ended June 30, 2018, compared to $0.1 million
for the three months ended June 30, 2017.
Net income attributable to common stockholders for the three
months ended June 30, 2018 was $1.0 million, compared to a net loss
attributable to common stockholders of $(0.3) million for the three
months ended June 30, 2017. Adjusted EBITDA was $1.3 million for
the three months ended June 30, 2018, compared to $0.6 million for
the three months ended June 30, 2017.
For the first six months of fiscal 2018, Luna reported net
income of $1.2 million compared to a net loss of $(1.6) million.
Net income from continuing operations improved by $2.0 million, to
$1.2 million, or $0.04 per share, for the six months ended June 30,
2018, compared to a net loss from continuing operations of $(0.8)
million, or $(0.03) per share, for the six months ended June 30,
2017. Adjusted EBITDA was $1.9 million for the six months ended
June 30, 2018 compared $0.4 million for the six months ended June
30, 2017. A reconciliation of net income/(loss) to adjusted EBITDA
can be found in the schedules included in this release.
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 Luna believes
may not be indicative of its operating performance, because either
they are unusual and Luna 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 8:30 am (EDT) today to discuss its financial
results for the three and six months ended June 30, 2018, the sale
of the Optoelectronic Solutions business and other recent business
developments. The call can be accessed by dialing 844.578.9643
domestically or 270.823.1522 internationally prior to the start of
the call. The participant access code is 9985726. 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 leader in
optical technology, providing unique capabilities in
high-performance fiber optic test products for the
telecommunications industry and distributed fiber optic sensing for
the aerospace and automotive industries. 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
Luna's expectations regarding its growth potential, the growth of
the fiber optic-based test and measurement market, and its business
focus. 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 Luna 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 Luna's products and services to meet expectations,
failure of target market to grow and expand, technological and
strategic challenges and those risks and uncertainties set forth in
Luna’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 Luna’s website at
www.lunainc.com. The statements made in this release are based on
information available to Luna 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
June 30, Six Months Ended June 30, 2018
2017 2018 2017
(unaudited) (unaudited) Revenues: Technology
development $ 5,466,281 $ 4,602,272 $ 10,103,056 $ 8,838,375
Products and licensing 8,306,367 6,690,759 15,862,763
12,541,554 Total revenues 13,772,648
11,293,031 25,965,819 21,379,929 Cost of
revenues: Technology development 3,945,126 3,443,954 7,298,628
6,553,423 Products and licensing 4,155,054 3,482,867
7,968,605 6,583,913 Total cost of revenues 8,100,180
6,926,821 15,267,233 13,137,336 Gross
profit 5,672,468 4,366,210 10,698,586
8,242,593 Operating expense: Selling, general and
administrative 3,767,456 3,367,716 7,577,072 7,089,889 Research,
development and engineering 1,003,863 818,891
2,105,352 1,747,662 Total operating expense 4,771,319
4,186,607 9,682,424 8,837,551 Operating
income/(loss) 901,149 179,603 1,016,162
(594,958 ) Other income/(expense): Investment income 100,846 —
175,756 — Other income/(expense) 1,187 (1,225 ) 2,583 (869 )
Interest expense (33,988 ) (60,386 ) (75,234 ) (124,760 ) Total
other income/(expense) 68,045 (61,611 ) 103,105
(125,629 ) Income/(loss) from continuing operations before income
taxes 969,194 117,992 1,119,267 (720,587 ) Income tax
(benefit)/expense (98,133 ) 40,937 (96,736 ) 67,627
Net income/(loss) from continuing operations 1,067,327 77,055
1,216,003 (788,214 ) Loss from discontinued operations, net of
income tax of $0 — (298,817 ) — (789,534 ) Net loss
from discontinued operations — (298,817 ) — (789,534
) Net income/(loss) 1,067,327 (221,762 ) 1,216,003 (1,577,748 )
Preferred stock dividend 63,235 29,536 127,660
63,632 Net income/(loss) attributable to common stockholders
$ 1,004,092 $ (251,298 ) $ 1,088,343 $ (1,641,380 )
Net income/(loss) per share from continuing operations: Basic $
0.04 $ — $ 0.04 $ (0.03 ) Diluted $ 0.03
$ — $ 0.04 $ (0.03 ) Net loss per share from
discontinued operations: Basic $ — $ (0.01 ) $ — $
(0.03 ) Diluted $ — $ (0.01 ) $ — $ (0.03 ) Net
income/(loss) per share attributable to common stockholders:
Basic
$ 0.04 $ (0.01 ) $ 0.04 $ (0.06 )
Diluted
$ 0.03 $ (0.01 ) $ 0.03 $ (0.06 ) Weighted average
common shares and common equivalent shares outstanding: Basic
27,531,361 27,600,147 27,368,185 27,570,919 Diluted 31,506,745
32,579,379 31,257,277 27,570,919
Luna Innovations
Incorporated Consolidated Balance Sheets
December 31, June 30, 2018 2017
(unaudited) Assets Current assets: Cash and cash
equivalents $ 33,292,800 $ 36,981,533 Accounts receivable, net
9,385,772 7,869,168 Receivable from sale of HSOR business 4,001,833
4,000,976 Contract assets 3,231,770 1,778,142 Inventory 6,906,998
6,951,110 Prepaid expenses and other current assets 1,054,984
1,220,650 Total current assets 57,874,157 58,801,579
Long-term contract assets 308,093 209,699 Property and equipment,
net 3,323,749 3,453,741 Intangible assets, net 3,137,083 3,237,593
Goodwill 502,000 502,000 Other assets 18,024 18,024
Total assets $ 65,163,106 $ 66,222,636
Liabilities and stockholders’ equity Liabilities: Current
liabilities: Current portion of long-term debt obligations $
1,527,828 $ 1,833,333 Current portion of capital lease obligations
34,661 43,665 Accounts payable 3,787,701 2,962,863 Accrued
liabilities 5,554,481 6,557,649 Contract liabilities 1,400,922
3,428,625 Total current liabilities 12,305,593
14,826,135 Long-term deferred rent 1,109,397 1,184,438 Long-term
debt obligations — 603,007 Long-term capital lease obligations
54,970 71,275
Total liabilities 13,469,960
16,684,855 Commitments and contingencies
Stockholders’ equity: Preferred stock, par value $0.001, 1,321,514
shares authorized, issued and outstanding at June 30, 2018 and
December 31, 2017 1,322 1,322 Common stock, par value $0.001,
100,000,000 shares authorized, 29,025,529 and 28,354,822 shares
issued, 27,772,424 and 27,283,918 shares outstanding at June 30,
2018 and December 31, 2017 29,897 29,186 Treasury stock at cost,
1,253,105 and 1,070,904 shares at June 30, 2018 and December 31,
2017 (2,116,640 ) (1,649,746 ) Additional paid-in capital
84,742,385 83,563,208 Accumulated deficit (30,963,818 ) (32,406,189
)
Total stockholders’ equity 51,693,146 49,537,781
Total liabilities and stockholders’ equity $
65,163,106 $ 66,222,636
Luna
Innovations Incorporated Consolidated Statements of Cash
Flows Six Months Ended June 30,
2018 2017 (unaudited) Cash flows
used in operating activities Net income/(loss) $ 1,216,003 $
(1,577,748 ) Adjustments to reconcile net income/(loss) to net cash
(used in)/provided by operating activities Depreciation and
amortization 622,577 1,753,748 Share-based compensation 212,149
321,756 Bad debt expense 6,000 40,753 Gain on disposal of fixed
assets (1,000 ) (670 ) Change in assets and liabilities Accounts
receivable (1,522,604 ) 1,433,014 Contract assets (645,824 )
(326,333 ) Inventory (482,194 ) (1,170,519 ) Other current assets
164,809 325,005 Accounts payable and accrued expenses (253,372 )
(894,315 ) Contract liabilities (2,053,566 ) (215,555 )
Net cash used in operating activities
(2,737,022 ) (314,321 )
Cash flows used in investing
activities Acquisition of property and equipment (198,012 )
(796,217 ) Intangible property costs (185,909 ) (318,942 ) Proceeds
from sale of property and equipment 1,000 3,000 Net
cash used in investing activities (382,921 ) (1,112,159 )
Cash
flows used in financing activities Payments on capital lease
obligations (25,309 ) (25,611 ) Payments of debt obligations
(916,665 ) (916,666 ) Repurchase of common stock (466,894 )
(143,266 ) Proceeds from the exercise of options and warrants
840,078 820 Net cash used in financing activities
(568,790 ) (1,084,723 )
Net decrease in cash or cash
equivalents (3,688,733 ) (2,511,203 ) Cash and cash
equivalents-beginning of period 36,981,533 12,802,458
Cash and cash equivalents-end of period $ 33,292,800 $
10,291,255
Luna Innovations
Incorporated Reconciliation of Net Income/(Loss) to EBITDA
and Adjusted EBITDA Three Months Ended June
30, Six Months Ended June 30, 2018
2017 2018 2017
(unaudited) (unaudited) Net income/(loss) $
1,067,327 $ (221,762 ) $ 1,216,003 $ (1,577,748 )
Less loss from discontinued operations,
net of income taxes
— (298,817 ) — (789,534 ) Net
income/(loss) from continuing operations 1,067,327 77,055 1,216,003
(788,214 ) Interest expense 33,988 60,386 75,234 124,760 Investment
income (100,846 ) — (175,756 ) — Tax expense (98,133 ) 40,937
(96,736 ) 67,627 Depreciation and amortization 314,725
285,253 622,577 646,145 EBITDA 1,217,061
463,631 1,641,322 50,318 Share-based compensation 117,823
151,672 212,149 321,756 Adjusted EBITDA
$ 1,334,884 $ 615,303 $ 1,853,471 $
372,074
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180801005239/en/
Luna Innovations IncorporatedJane Bomba,
1-303-829-1211IR@lunainc.com
Luna Innovations (NASDAQ:LUNA)
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