- Fifth consecutive quarter of
year-over-year, double-digit revenue growth
- Total revenues of $13.5 million for
the three months ended December 31, 2018, up 37% compared to the
three months ended December 31, 2017; total revenues of $42.9
million for fiscal year 2018, an increase of 30% compared to fiscal
2017
- Pre-tax income from continuing
operations improved to $0.6 million for the three months ended
December 31, 2018, compared to a loss of $(0.5) million for the
prior-year fourth quarter; for fiscal 2018, pre-tax income from
continuing operations increased to $1.3 million compared to a
pre-tax loss from continuing operations of $(2.4) million in fiscal
2017
- Net income attributable to common
stockholders improved to $0.9 million for the three months ended
December 31, 2018, compared to $0.4 million for the prior-year
fourth quarter; for fiscal 2018, income attributable to common
stockholders declined to $10.7 million from $14.5 million in fiscal
2017, primarily due to the smaller gain recognized on the sale of
discontinued operations in 2018 compared to 2017.
- Adjusted EBITDA of $1.6 million for
the three months ended December 31, 2018 and $3.0 million for
fiscal year 2018, and a gross margin improvement of 5 basis points
for the full year
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced fiber optic-based technology, today reported strong
financial results for the three months and fiscal year ended
December 31, 2018.
“This has been an extraordinary year for Luna, and I’m extremely
pleased with our performance in the fourth quarter and for this
fiscal year,” said Scott Graeff, President and Chief Executive
Officer of Luna. “Our strong financial results underscore how we
have executed on our strategy to realign Luna's business to focus
on our core, fiber optic-based test and measurement offerings.
We’ve identified and acquired new businesses to complement our
existing platforms and have been committed to divesting those
businesses that no longer fit our growth profile as an
organization. These actions, combined with the strength of our
customer base in rapid-growth industries, have driven Luna’s fiscal
2018 performance, and we are well positioned for future
growth.”
Graeff continued, “As prudent stewards of capital, we believe
that the acquisition of General Photonics, a leader in
characterization and control of light for photonics applications,
will only continue to drive Luna’s growth. This acquisition, and
the acquisition of Micron Optics completed last year, spotlight
Luna’s ability to acquire assets that fit squarely within our core
while delivering an excellent return on invested capital.”
Fourth-Quarter and Full-Year Fiscal
2018 Financial Summary
Total revenues for the three months ended December 31, 2018 were
$13.5 million, compared to $9.9 million for the three months ended
December 31, 2017. Total products and licensing revenues increased
to $8.0 million for the three months ended December 31, 2018,
compared to $4.7 million for the three months ended December 31,
2017. The increase in the products and licensing revenues for the
three months ended December 31, 2018, compared to the three months
ended December 31, 2017, includes revenues realized from the
acquisition of Micron Optics, Inc. (“MOI”) in October 2018 along
with continued growth in sales of Luna's fiber optic-based sensing
products, including its ODiSI products and its Terahertz products.
Technology development revenues increased to $5.5 million for the
three months ended December 31, 2018, compared to $5.1 million for
the three months ended December 31, 2017. The increase in
technology development revenues for the three months ended December
31, 2018 compared to the prior-year period was due to growth in
various government research programs surrounding applications of
advanced materials and Luna's success in winning related research
contracts.
Gross profit was $6.6 million, or 49% of revenues, for the three
months ended December 31, 2018, compared to gross profit of $4.2
million, or 42% of revenues, for the three months ended December
31, 2017.
Selling, general and administrative ("SG&A") expenses were
$4.9 million for the three months ended December 31, 2018, compared
to $3.9 million for the three months ended December 31, 2017.
Research, development and engineering ("R&D") expenses were
$1.3 million for the three months ended December 31, 2018, compared
to $0.7 million for the three months ended December 31, 2017. The
increase in SG&A expenses was due primarily to $0.8 million in
transaction-related costs associated with the acquisition of MOI
and $0.8 million of expenses associated with the operations of MOI
following the acquisition.
Pre-tax income from continuing operations improved to $0.6
million for the three months ended December 31, 2018 compared to a
pre-tax loss from continuing operations of $(0.5) million for the
three months ended December 31, 2017. Net income from continuing
operations declined slightly to $(0.1) million for the three months
ended December 31, 2018, compared to breakeven for the prior-year
fiscal quarter due to the allocation of income taxes between
continuing and discontinued operations.
Net income attributable to common stockholders for the three
months ended December 31, 2018 was $0.9 million, compared to $0.4
million for the three months ended December 31, 2017. The increase
in net income attributable to common stockholders includes a $0.6
million increase in income from discontinued operations associated
with finalization of the purchase price from the sale of Luna's
optoelectronics business in July 2018.
Adjusted EBITDA was $1.6 million for the three months ended
December 31, 2018, compared to $0.7 million for the three months
ended December 31, 2017.
For the full year fiscal 2018, Luna reported total revenues of
$42.9 million, an increase of 30% compared to total revenues of
$33.1 million for fiscal 2017. Gross profit improved to $19.4
million, or 45% of revenues, for 2018 compared to $13.4 million, or
40% or revenues, for 2017. SG&A expenses increased to $14.8
million for 2018 compared to $12.9 million in 2017. The increase in
SG&A expenses included $0.8 million in costs associated with
the acquisition of MOI. R&D expenses were $3.8 million in 2018
compared to $2.7 million in 2017.
Pre-tax income from continuing operations improved to$1.3
million for fiscal 2018 compared to a pre-tax loss from continuing
operations of $(2.4) million for fiscal 2017. Income from
continuing operations improved to $1.2 million compared to a loss
from continuing operations of $(1.3) million for 2017.
Net income attributable to common stockholders was $10.7 million
for fiscal 2018 compared to $14.5 million for fiscal 2017. The
year-over-year decline was due primarily to the larger gain
recognized on the sale of Luna's high-speed optical receivers
business in 2017 compared to the gain from the sale of Luna's
optoelectronic components business in 2018. Net income from
continuing operations improved to $1.2 million, or $0.04 per
diluted share for fiscal 2018, compared to a net loss from
continuing operations of $(1.3) million, or $(0.05) per diluted
share for fiscal 2017. Adjusted EBITDA was $3.0 million for fiscal
2018 compared to $0.3 million for the prior fiscal year. A
reconciliation of net income to adjusted EBITDA can be found in the
schedules included in this release.
2019 Full Year Outlook:
Luna expects:
- Total revenues in the range of $60
million to $65 million for full fiscal 2019; and
- Adjusted EBITDA in the range of $6.0
million to $6.5 million for full fiscal 2019.
Luna is not providing outlook for net income, which is the most
directly comparable GAAP measure to adjusted EBITDA, because
changes in the items that Luna excludes from net income to
calculate adjusted EBITDA, including items such as share-based
compensation, amortization of acquired intangible assets, tax
expense, and significant non-recurring charges, among other things,
can be dependent on future events that are less capable of being
controlled or reliably predicted by management and are not part of
Luna's routine operating activities.
The outlook above includes the expected operating results from
Luna's acquisition of General Photonics Corporation announced today
along with the associated acquisition costs. It does not include
any future acquisitions, divestitures, or unanticipated events.
Non-GAAP Financial
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 (EST) today to discuss its financial
results for the fourth-quarter and year-end fiscal 2018, the
acquisition of General Photonics and 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 8384348. 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-based, test products for the
telecommunications industry and distributed fiber optic-based
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 and the impact
of its acquisitions of MOI and General Photonics on future growth,
its projected 2019 financial results, 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 Form 10-Q for the quarter ended September 30, 2018, and
Luna's other periodic reports and 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
IncorporatedConsolidated Statements of Operations
Three months ended December 31, Year ended December
31, 2018 2017 2018
2017 (unaudited) (unaudited)
(unaudited) Revenues: Technology development revenues $ 5,548,639 $
5,147,954 $ 20,967,556 $ 18,576,383 Products and licensing revenues
7,989,686 4,714,269 21,949,689 14,505,482
Total revenues 13,538,325 9,862,223 42,917,245
33,081,865 Cost of revenues: Technology development
costs 4,268,509 3,943,118 15,400,475 13,988,378 Products and
licensing costs 2,697,538 1,731,643 8,078,870
5,724,457 Total cost of revenues 6,966,047 5,674,761
23,479,345 19,712,835 Gross profit 6,572,278
4,187,462 19,437,900 13,369,030
Operating expense: Selling, general and administrative 4,896,136
3,943,520 14,794,205 12,923,841 Research, development and
engineering 1,252,663 691,566 3,766,160
2,653,337 Total operating expense 6,148,799 4,635,086
18,560,365 15,577,178 Operating income/(loss)
423,479 (447,624 ) 877,535 (2,208,148 ) Other
expense: Other (expense)/income, net (1,070 ) 114 (17,143 ) 26,106
Investment income 198,525 —
549,580 —
Interest expense, net (21,136 ) (38,474 ) (124,344 ) (217,352 )
Total other income/(expense) 176,319 (38,360 ) 408,093
(191,246 ) Income/(loss) from continuing operations before
income taxes 599,798 (485,984 ) 1,285,628 (2,399,394 ) Income tax
expense/(benefit) 722,148 (486,530 ) 47,818
(1,148,579 ) (Loss)/Income from continuing operations (122,350 )
546 1,237,810 (1,250,815 ) Income from discontinued operations, net
of income taxes 1,062,186 434,783 9,766,431
15,865,720 Net income 939,836 435,329 11,004,241 14,614,905
Preferred stock dividend 66,407 49,558 257,302
146,889 Net income attributable to common stockholders $
873,429 $ 385,771 $ 10,746,939 $ 14,468,016
Net income/(loss) per share from continuing operations:
Basic $ — $ — $ 0.04 $ (0.05 )
Diluted
$ — $ — $ 0.04 $ (0.05 ) Net income per share from discontinued
operations: Basic $ 0.04 $ 0.01 $ 0.35 $ 0.58 Diluted $ 0.04 $ 0.01
$ 0.30 $ 0.58 Net income per share attributable to common
stockholders: Basic $ 0.03 $ 0.01 $ 0.39 $ 0.52 Diluted $ 0.03 $
0.01 $ 0.33 $ 0.52 Weighted average shares: Basic 28,067,348
27,485,278 27,596,401 27,579,988 Diluted 28,067,348 31,790,418
32,452,228 27,579,988
Luna Innovations
IncorporatedConsolidated Balance Sheets
December 31,2018
December 31,2017
(unaudited)
Assets Current assets: Cash and cash equivalents
$ 42,460,267 $ 36,981,533 Accounts receivable, net 13,037,068
5,929,042 Receivable from sale of HSOR business 2,500,000 4,000,976
Contract assets 2,422,495 1,778,142 Inventory, net 6,873,742
4,634,781 Prepaid expenses 935,185 1,140,999 Current assets held
for sale — 4,336,105 Total current assets 68,228,757
58,801,578 Property and equipment, net 3,627,886 2,854,641
Intangible assets, net 3,302,270 1,727,390 Goodwill 101,008 — Long
term contract assets 336,820 209,699 Other assets 1,995 1,995
Non-current assets held for sale
— 2,627,333
Total assets $ 75,598,736 $
66,222,636 Liabilities and stockholders’
equity Current liabilities: Current portion of long term debt
obligation $ 619,315 $ 1,833,333 Current portion of capital lease
obligation 40,586 43,665 Accounts payable 2,395,984 2,111,077
Accrued liabilities 6,597,458 6,547,230 Contract liabilities
2,486,111 3,318,379 Current liabilities held for sale —
972,451 Total current liabilities 12,139,454 14,826,135
Long-term deferred rent 1,035,974 1,184,438 Long-term debt
obligation — 603,007 Long-term capital lease obligation 68,978
71,275
Total liabilities 13,244,406
16,684,855 Commitments and contingencies
Stockholders’ equity: Preferred stock, par value $0.001, 1,321,514
shares authorized, issued and outstanding at December 31, 2018 and
2017 1,322 1,322 Common stock, par value $0.001, 100,000,000 shares
authorized, 29,209,506 and 28,354,822 shares issued, 27,956,401 and
27,283,918 shares outstanding at December 31, 2018 and 2017,
respectively 30,120 29,186 Treasury stock at cost, 1,253,105 and
1,070,904 shares at December 31, 2018 and 2017, respectively
(2,116,640 ) (1,649,746 ) Additional paid-in capital 85,744,750
83,563,208 Accumulated deficit (21,305,222 ) (32,406,189 )
Total
stockholders’ equity 62,354,330 49,537,781
Total liabilities and stockholders’ equity $
75,598,736 $ 66,222,636
Luna Innovations
IncorporatedConsolidated Statements of Cash Flows
Year ended December 31, 2018
2017 (unaudited)
Cash flows (used in)/provided by
operating activities: Net income $ 11,004,241 $ 14,614,905
Adjustments to reconcile net income to net cash (used in)/provided
by operating activities: Depreciation and amortization 1,095,418
2,526,609 Stock-based compensation 527,189 715,094 (Gain)/loss on
disposal of fixed assets (1,000 ) 3,640 Gain on sale of
discontinued operations, net of income taxes (8,595,798 )
(15,671,028 ) Bad debt 6,000 99,888 Changes in operating assets and
liabilities: Accounts receivable (6,240,377 ) 1,152,055 Contract
assets (761,714 ) — Inventory (967,797 ) (1,902,311 ) Prepaid
expenses 1,849,630 83,428 Accounts payable and accrued expenses
(661,928 ) (896,534 ) Contract liabilities (986,498 ) — Deferred
credits — 189,296 Net cash (used in)/provided by
operating activities (3,732,634 ) 915,042
Cash flows
provided by investing activities: Acquisition of property and
equipment (329,249 ) (1,352,531 ) Proceeds from sale of property
and equipment 1,000 3,000 Intangible property costs (309,266 )
(495,597 ) Acquisition of Micron Optics (5,001,750 ) — Proceeds
from sale of discontinued operations, net 15,799,529
28,026,528 Net cash provided by investing activities
10,160,264 26,181,400
Cash flows used in financing
activities: Payments on debt obligations (1,833,333 )
(1,833,333 ) Payments on capital lease obligation (46,653 ) (52,128
) Purchase of treasury stock (466,894 ) (1,131,759 ) Proceeds from
the exercise of options 1,397,984 99,853 Net cash
used in financing activities (948,896 ) (2,917,367 )
Net change
in cash and cash equivalents 5,478,734 24,179,075 Cash and cash
equivalents—beginning of period 36,981,533 12,802,458
Cash and cash equivalents—end of period $ 42,460,267 $
36,981,533
Luna Innovations
IncorporatedReconciliation of Net Income to EBITDA and
Adjusted EBITDA
Three months ended December 31, Year
endedDecember 31, 2018
2017 2018 2017
(unaudited) (unaudited) Net income $ 939,836 435,329
$ 11,004,241 $ 14,614,905 Less income from discontinued operations,
net of income taxes 1,062,186 434,783 9,766,431
15,865,720 Net (loss)/income from continuing
operations (122,350 ) 546 1,237,810 (1,250,815 ) Income tax
expense/(benefit) 722,148 (486,530 ) 47,818
(1,148,579 ) Income/(loss) from continuing operations before income
taxes 599,798 (485,984 ) 1,285,628 (2,399,394 ) Investment income
(198,525 ) — (549,580 ) — Interest expense 21,136 38,474 124,344
217,352 Depreciation and amortization 197,203 311,565
908,347 1,136,729 EBITDA 619,612 (135,945 ) 1,768,739
(1,045,313 ) Share-based compensation 181,607 194,861 527,189
715,094 Non-recurring charges 751,102 595,992 751,102
595,992 Adjusted EBITDA $ 1,552,321 $ 654,908
$ 3,047,030 $ 265,773
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190304005416/en/
Investor Contacts:Jane BombaPhone: 303-829-1211Email:
IR@lunainc.comSally J. CurleyLuna
Innovations IncorporatedPhone: 614-530-3002Email: IR@lunainc.com
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