Highlights
- Total revenues of $14.8 million for
the three months ended March 31, 2019, up 69% compared to the three
months ended March 31, 2018
- Products and licensing revenues of
$8.2 million for the three months ended March 31, 2019, up 98%
compared to the three months ended March 31, 2018
- Net income was $1.1 million, or
$0.03 per fully diluted share, for the three months ended March 31,
2019, compared to $0.1 million, or $0.00 per fully diluted share,
for the three months ended March 31, 2018
- Adjusted EBITDA improved to $1.0
million for the three months ended March 31, 2019, compared to a
loss of $(0.1) million for the three months ended March 31,
2018
- Reaffirms 2019 outlook
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced optical technology, today announced its financial results
for the three months ended March 31, 2019.
“I continue to be proud of the Luna team and how we’ve driven
performance and delivered such a strong first quarter,” said Scott
Graeff, President and Chief Executive Officer of Luna. “We continue
to build on the momentum we gained in 2018. The Luna team, through
all levels of this organization, demonstrated leadership and
delivered outstanding customer service, all while closing sales and
filling the pipeline. Integration of the Micron Optics and General
Photonics acquisitions is going smoothly. It is clear that we
acquired excellent talent, strong capabilities and assets that are
both strategic and synergistic. In addition, performance in
Adjusted EBITDA is a good demonstration of the accretion delivered
by our recent acquisitions. Overall, this is a great start to our
fiscal 2019.”
First-quarter Fiscal 2019 Financial
Summary
Financial results for the three months ended March 31, 2019
reflect strong momentum entering the fiscal year. These results
include a full quarter of the business of Micron Optics, Inc.
("MOI"), acquired in October 2018, and one month of the operations
of General Photonics ("GP"), acquired on March 1, 2019. Revenue and
expenses related to the Company's optoelectronics business, which
was divested in July 2018, are classified as discontinued
operations in the Company's results of operations for the three
months ended March 31, 2018:
Three Months Ended March 31, 2019 2018 Change
Revenues: Technology development $ 6,640,743 $ 4,636,776 43.2 %
Products and licensing $ 8,192,375 $ 4,131,754 98.3 %
Total revenues $ 14,833,118 $ 8,768,530 69.2 % Gross profit
$ 6,767,634 $ 3,839,626 76.3 % Gross margin 45.6 % 43.8 % 180 bps
Operating expense $ 7,665,211 $ 4,213,082 81.9 % Operating
loss $ (897,577 ) $ (373,456 ) 140.3 % Net income $
1,125,879 $ 148,676 $1.0M Adjusted EBITDA $
958,810 $ (52,339 ) $1.0M
A reconciliation of Adjusted EBITDA to net income can be found
in the schedules included in this release.
Products and licensing revenue for the three months ended March
31, 2019, increased compared to the prior year period due partially
to the inclusion of incremental revenues from the acquisitions of
both MOI in October 2018 and GP at the beginning of March 2019. In
addition, products and licensing revenue benefited from continued
growth in sales of Luna's fiber optic-based sensing products,
including its ODiSI products. Technology development revenues
increased for the three months ended March 31, 2019, compared to
the prior-year period due to growth in various government research
programs surrounding applications of optical sensing and advanced
materials and Luna's success in winning related research
contracts.
The increase in operating expenses was due primarily to $0.9
million in transaction-related costs associated with the
acquisition of GP and $1.8 million of expenses associated with the
operations of MOI and GP. Neither of these acquisitions were
present in the first quarter of 2018.
Pre-tax loss from continuing operations increased to $(0.7)
million for the three months ended March 31, 2019, compared to
$(0.3) million for the prior year fiscal quarter due primarily to
transaction-related expenses associated with the acquisition of
GP.
Income tax benefit for the three months ended March 31, 2019,
was due to a one-time non-cash benefit resulting from a reduction
in the valuation allowance associated with the company's net
deferred tax asset following the acquisition of GP.
Net income attributable to common stockholders for the three
months ended March 31, 2019, was $1.0 million, or $0.03 per fully
diluted share, compared to net income attributable to common
stockholders of $0.1 million, or $0.00 per fully diluted share, for
the three months ended March 31, 2018. The increase in net income
attributable to common stockholders was driven by improved overall
performance and included the $1.9 million income tax benefit from
the release of valuation allowance, partially offset by $0.9
million of transaction-related costs associated with the
acquisition of GP. Net income attributable to common stockholders
for the three months ended March 31, 2019, also included $0.5
million of non-cash expenses for share-based compensation and
amortization of intangible assets associated with the acquisitions
of MOI and GP.
Adjusted EBITDA was $1.0 million for the three months ended
March 31, 2019, compared to $(0.1) million for the three months
ended March 31, 2018.
2019 Full-year Outlook:
Luna reaffirms:
- 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 an outlook for net income, which is the
most directly comparable generally accepted accounting principles
("GAAP") measure to Adjusted EBITDA, because changes in the items
that Luna excludes from net income to calculate Adjusted EBITDA,
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 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 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 5:00 pm (ET) today to discuss its financial
results for the three months ended March 31, 2019. 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 5299635. 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 the integration of its recent
acquisitions of MOI and GP, 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-K for the year ended
December 31, 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 Incorporated Consolidated
Statements of Operations Three Months Ended March
31, 2019 2018 (unaudited) Revenues:
Technology development $ 6,640,743 $ 4,636,776 Products and
licensing 8,192,375 4,131,754 Total revenues
14,833,118 8,768,530 Cost of revenues: Technology
development 4,816,146 3,353,501 Products and licensing 3,249,338
1,575,403 Total cost of revenues 8,065,484
4,928,904 Gross profit 6,767,634 3,839,626
Operating expense: Selling, general and administrative 6,207,318
3,333,490 Research, development and engineering 1,457,893
879,592 Total operating expense 7,665,211 4,213,082
Operating loss (897,577 ) (373,456 ) Other income/(expense):
Investment income 171,225 75,912 Other expense (1,729 ) (10,854 )
Interest expense (11,187 ) (40,647 ) Total other income 158,309
24,411 Loss from continuing operations before income
taxes (739,268 ) (349,045 ) Income tax benefit (1,865,147 ) (76,967
) Net income/(loss) from continuing operations 1,125,879
(272,078 ) Income from discontinued operations, net of income tax
of $0 and $78,363 — 420,754 Net income from
discontinued operations — 420,754 Net income
1,125,879 148,676 Preferred stock dividend 83,058 64,425
Net income attributable to common stockholders $ 1,042,821
$ 84,251 Net income/(loss) per share from continuing
operations: Basic $ 0.04 $ (0.01 ) Diluted $ 0.03 $
(0.01 ) Net income per share from discontinued operations: Basic $
— $ 0.02 Diluted $ — $ 0.02 Net income
per share attributable to common stockholders: Basic $ 0.04
$ — Diluted $ 0.03 $ — Weighted average common
shares and common equivalent shares outstanding: Basic 28,039,080
27,204,989 Diluted 33,479,935 27,204,989
Luna Innovations Incorporated
Consolidated Balance Sheets
March 31,2019
December 31,2018
(unaudited) Assets Current assets: Cash and cash
equivalents $ 24,580,006 $ 42,460,267 Accounts receivable, net
13,505,444 13,037,068 Receivable from sale of HSOR business
2,500,375 2,500,000 Contract assets 2,829,186 2,422,495 Inventory
9,996,054 6,873,742 Prepaid expenses and other current assets
1,087,416 935,185 Total current assets 54,498,481
68,228,757 Long-term contract assets 359,166 336,820 Property and
equipment, net 3,845,748 3,627,886 Intangible assets, net
11,309,181 3,302,270 Goodwill 10,345,249 101,008 Other assets
3,205,983 1,995
Total assets $ 83,563,808
$ 75,598,736
Liabilities and stockholders’
equity Liabilities: Current liabilities: Current portion of
long-term debt obligations $ 247,726 $ 619,315 Current portion of
capital lease obligations — 40,586 Accounts payable 4,945,927
2,395,984 Accrued liabilities 8,599,225 6,597,458 Contract
liabilities 2,792,119 2,486,111 Total current
liabilities 16,584,997 12,139,454 Long-term deferred rent —
1,035,974 Other long-term liabilities 2,970,879 — Long-term capital
lease obligations — 68,978
Total liabilities
19,555,876 13,244,406 Commitments and contingencies
Stockholders’ equity: Preferred stock, par value $0.001, 1,321,514
shares authorized, issued and outstanding at March 31, 2019 and
December 31, 2018 1,322 1,322 Common stock, par value $0.001,
100,000,000 shares authorized, 29,398,818 and 29,209,506 shares
issued, 28,145,713 and 27,956,401 shares outstanding at March 31,
2019 and December 31, 2018, respectively 30,329 30,120 Treasury
stock at cost, 1,253,105 shares at March 31, 2019 and December 31,
2018 (2,116,640 ) (2,116,640 ) Additional paid-in capital
86,355,322 85,744,750 Accumulated deficit (20,262,401 ) (21,305,222
)
Total stockholders’ equity 64,007,932 62,354,330
Total liabilities and stockholders’ equity $
83,563,808 $ 75,598,736
Luna
Innovations Incorporated Consolidated Statements of Cash
Flows Three Months Ended March 31, 2019
2018 (unaudited) Cash flows provided
by/(used in) operating activities Net income $ 1,125,879 $
148,676 Adjustments to reconcile net income to net cash provided
by/(used in) operating activities Depreciation and amortization
617,309 307,852 Share-based compensation 342,765 94,606 Deferred
taxes (1,889,266 ) — Change in assets and liabilities Accounts
receivable 1,052,571 (229,535 ) Contract assets (429,037 ) 221,386
Inventory (527,849 ) (110,095 ) Other current assets (41,549 )
133,293 Accounts payable and accrued expenses 1,196,425 (1,456,154
) Contract liabilities 149,435 (1,650,363 )
Net cash provided by/(used in) operating
activities
1,596,683 (2,540,334 )
Cash flows used in investing
activities Acquisition of property and equipment (215,251 )
(129,720 ) Intangible property costs (60,639 ) (113,108 )
Acquisition of General Photonics Corporation (19,004,250 ) —
Net cash used in investing activities (19,280,140 ) (242,828 )
Cash flows used in financing activities Payments on finance
lease obligations (6,763 ) (13,611 ) Payments of debt obligations
(375,000 ) (458,333 ) Repurchase of common stock — (306,041 )
Proceeds from the exercise of options and warrants 184,959
22,288 Net cash used in financing activities (196,804 )
(755,697 )
Net decrease in cash and cash equivalents
(17,880,261 ) (3,538,859 ) Cash and cash equivalents-beginning of
period 42,460,267 36,981,533 Cash and cash
equivalents-end of period $ 24,580,006 $ 33,442,674
Luna Innovations Incorporated
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Three Months Ended March 31, 2019
2018 (unaudited) Net income $ 1,125,879 $ 148,676
Less income from discontinued operations, net of income tax —
420,754 Net income/(loss) from continuing operations
1,125,879 (272,078 ) Interest expense 11,187 40,647 Investment
income (171,225 ) (75,912 ) Tax benefit (1,865,147 ) (76,967 )
Depreciation and amortization 617,309 237,365 EBITDA
(281,997 ) (146,945 ) Share-based compensation 342,765 94,606
Non-recurring charges (1) 898,042 — Adjusted EBITDA $
958,810 $ (52,339 ) (1) Non-recurring charges consist
of transaction-related expenses incurred during the quarter ended
March 31, 2019, related to the acquisition of General Photonics.
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version on businesswire.com: https://www.businesswire.com/news/home/20190508005868/en/
Investor Contacts:Jane BombaLuna Innovations
IncorporatedPhone: 303-829-1211Email: IR@lunainc.com
Sally J. CurleyLuna Innovations
Incorporated614-530-3002IR@lunainc.com
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