Raises 2019 Outlook
Highlights
- Total revenues of $17.8 million for the three months ended
June 30, 2019, up 80% compared to the three months ended June 30,
2018
- Products and licensing revenues of $11.4 million for the
three months ended June 30, 2019, up 155% compared to the three
months ended June 30, 2018
- Net income of $0.8 million, or $0.02 per fully diluted
share, for the three months ended June 30, 2019, compared to $1.1
million, or $0.03 per fully diluted share, for the prior-year
period, which included $0.8 million ($0.02 per share) in income
from discontinued operations
- Adjusted EBITDA improved to $2.4 million for the three
months ended June 30, 2019, compared to $0.5 million for the three
months ended June 30, 2018
- Raises 2019 outlook
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced optical technology, today announced its financial results
for the three and six months ended June 30, 2019.
“Building on a strong first quarter, the Luna team continued to
exceed our goals and deliver excellent performance on the top- and
bottom-lines,” said Scott Graeff, President and Chief Executive
Officer of Luna. “I was particularly pleased to see continued
robust performance from our legacy products, in addition to those
products that came to us through the Micron Optics and General
Photonics acquisitions. Our first-half performance gives us the
confidence to increase our 2019 outlook. For full fiscal 2019, we
now expect total revenues to be between $66 million to $69 million
and adjusted EBITDA to be between $7.2 million to $7.6 million.
With a half year to go, the Luna team remains focused on continuing
to execute our strategy and fully integrate the acquisitions, while
driving growth and delivering the tailored service and solutions
our customers need.”
Second-Quarter Fiscal 2019 Financial
Summary
Financial results for the three months ended June 30, 2019,
continue the strong momentum from the beginning of the fiscal year.
These results include a full quarter of the businesses of both
Micron Optics, Inc. ("MOI"), acquired in October 2018, and General
Photonics Corporation ("GP"), acquired in March 2019. Revenue and
expenses related to Luna's optoelectronics business, which was
divested in July 2018, are classified as discontinued operations in
Luna's results of operations for the three months ended June 30,
2018. Highlights of the financial results for the three months
ended June 30, 2019 are:
Three Months Ended June 30,
2019
2018
Change
Revenues:
Products and licensing
$
11,372,664
$
4,457,084
155.2
%
Technology development
6,440,999
5,466,280
17.8
%
Total revenues
$
17,813,663
$
9,923,364
79.5
%
Gross profit
$
8,751,915
$
4,230,652
106.9
%
Gross margin
49.1
%
42.6
%
Operating expense
$
7,737,955
$
4,025,684
92.2
%
Operating income
$
1,013,960
$
204,968
394.7
%
Net income
$
840,292
$
1,067,328
(21.3
)%
Adjusted EBITDA
$
2,395,658
$
549,736
335.8
%
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 June
30, 2019, increased compared to the prior year period due largely
to the inclusion of the incremental revenues from the acquisitions
mentioned above. In addition, products and licensing revenue
strongly increased from revenues associated with Luna’s
communications test products and other Luna legacy products.
Technology development revenues increased for the three months
ended June 30, 2019, compared to the prior-year period due to
growth in various government research programs.
The increase in operating expenses was due primarily to $2.6
million in expenses associated with the acquired operations of MOI
and GP. Neither of these acquisitions were present in the second
quarter of 2018.
Pre-tax income from continuing operations increased to $1.1
million for the three months ended June 30, 2019, compared to $0.3
million for the prior year fiscal quarter driven primarily by
strong top-line performance and prudent expense management.
Net income attributable to common stockholders for the three
months ended June 30, 2019, was $0.8 million, or $0.02 per fully
diluted share, compared to net income attributable to common
stockholders of $1.0 million, or $0.03 per fully diluted share, for
the three months ended June 30, 2018. The slight decrease in net
income attributable to common stockholders was driven by the income
from discontinued operations recognized in the second quarter of
2018. Net income attributable to common stockholders for the three
months ended June 30, 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 $2.4 million for the three months ended June
30, 2019, compared to $0.5 million for the three months ended June
30, 2018. The growth was driven by strong top-line growth from both
organic businesses and acquisitions, and prudent expense
management.
First-Half Fiscal 2019 Financial
Summary
Highlights of the financial results for the six months ended
June 30, 2019 are:
Six Months Ended June 30,
2019
2018
Change
Revenues:
Products and licensing
$
19,565,039
$
8,588,838
127.8
%
Technology development
13,081,742
10,103,056
29.5
%
Total revenues
$
32,646,781
$
18,691,894
74.7
%
Gross profit
$
15,519,548
$
8,070,278
92.3
%
Gross margin
47.5
%
43.2
%
Operating expense
$
15,421,944
$
8,238,766
87.2
%
Operating income/(loss)
$
97,604
$
(168,488
)
Net income
$
1,966,171
$
1,216,003
61.7
%
Adjusted EBITDA
$
3,335,274
$
497,398
570.5
%
2019 Full-Year Outlook:
Based upon a strong first-half 2019 performance, Luna is raising
its 2019 outlook:
- Total revenues in the range of $66 million to $69 million for
full fiscal 2019, up from $60 million to $65 million; and
- Adjusted EBITDA in the range of $7.2 million to $7.6 million
for full fiscal 2019, up from $6.0 million to $6.5 million.
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, 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 and six months ended June 30, 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 1994289. 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 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 March 31, 2019, 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 June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(unaudited)
(unaudited)
Revenues:
Products and licensing
$
11,372,664
$
4,457,084
$
19,565,039
$
8,588,838
Technology development
6,440,999
5,466,280
13,081,742
10,103,056
Total revenues
17,813,663
9,923,364
32,646,781
18,691,894
Cost of revenues:
Products and licensing
4,577,774
1,747,585
7,827,112
3,322,988
Technology development
4,483,974
3,945,127
9,300,121
7,298,628
Total cost of revenues
9,061,748
5,692,712
17,127,233
10,621,616
Gross profit
8,751,915
4,230,652
15,519,548
8,070,278
Operating expense:
Selling, general and administrative
6,002,613
3,265,408
12,228,709
6,598,898
Research, development and engineering
1,735,342
760,276
3,193,235
1,639,868
Total operating expense
7,737,955
4,025,684
15,421,944
8,238,766
Operating income/(loss)
1,013,960
204,968
97,604
(168,488
)
Other income/(expense):
Investment income
76,813
99,844
268,020
175,756
Other expense
(3,056
)
(9,369
)
(4,452
)
(20,223
)
Interest expense
(52
)
(34,484
)
(12,775
)
(75,131
)
Total other income
73,705
55,991
250,793
80,402
Income/(loss) from continuing operations
before income taxes
1,087,665
260,959
348,397
(88,086
)
Income tax expense/(benefit)
247,373
(38,269
)
(1,617,774
)
(115,236
)
Net income from continuing operations
840,292
299,228
1,966,171
27,150
Income from discontinued operations, net
of income tax of ($59,864) and $18,499
—
768,100
—
1,188,853
Net income
840,292
1,067,328
1,966,171
1,216,003
Preferred stock dividend
89,549
63,235
172,607
127,660
Net income attributable to common
stockholders
$
750,743
$
1,004,093
$
1,793,564
$
1,088,343
Net income per share from continuing
operations:
Basic
$
0.03
$
0.01
$
0.07
$
—
Diluted
$
0.02
$
0.01
$
0.06
$
—
Net income per share from discontinued
operations:
Basic
$
—
$
0.03
$
—
$
0.04
Diluted
$
—
$
0.02
$
—
$
0.04
Net income per share attributable to
common stockholders:
Basic
$
0.03
$
0.04
$
0.06
$
0.04
Diluted
$
0.02
$
0.03
$
0.05
$
0.03
Weighted average common shares and common
equivalent shares outstanding:
Basic
28,246,840
27,531,361
28,143,534
27,368,185
Diluted
33,650,790
31,506,745
33,588,951
31,257,277
Luna Innovations
Incorporated
Consolidated Balance
Sheets
June 30, 2019
December 31, 2018
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
23,537,673
$
42,460,267
Accounts receivable, net
13,845,438
13,037,068
Receivable from sale of HSOR business
2,500,375
2,500,000
Contract assets
3,094,279
2,422,495
Inventory
9,732,937
6,873,742
Prepaid expenses and other current
assets
1,063,124
935,185
Total current assets
53,773,826
68,228,757
Long-term contract assets
386,350
336,820
Property and equipment, net
3,752,698
3,627,886
Intangible assets, net
10,952,448
3,302,270
Goodwill
10,345,249
101,008
Other assets
2,978,346
1,995
Total assets
$
82,188,917
$
75,598,736
Liabilities and stockholders’
equity
Liabilities:
Current liabilities:
Current portion of long-term debt
obligations
$
—
$
619,315
Current portion of capital lease
obligations
—
40,586
Accounts payable
3,000,066
2,395,984
Accrued liabilities
8,972,412
6,597,458
Contract liabilities
2,407,830
2,486,111
Total current liabilities
14,380,308
12,139,454
Long-term deferred rent
—
1,035,974
Other long-term liabilities
2,620,446
—
Long-term capital lease obligations
—
68,978
Total liabilities
17,000,754
13,244,406
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001,
1,321,514 shares authorized, issued and outstanding at June 30,
2019 and December 31, 2018
1,322
1,322
Common stock, par value $0.001,
100,000,000 shares authorized, 29,606,604 and 29,209,506 shares
issued, 28,300,766 and 27,956,401 shares outstanding at June 30,
2019 and December 31, 2018, respectively
30,557
30,120
Treasury stock at cost, 1,305,838 and
1,253,105 shares at June 30, 2019 and December 31, 2018,
respectively
(2,337,110
)
(2,116,640
)
Additional paid-in capital
87,004,906
85,744,750
Accumulated deficit
(19,511,512
)
(21,305,222
)
Total stockholders’ equity
65,188,163
62,354,330
Total liabilities and stockholders’
equity
$
82,188,917
$
75,598,736
Luna Innovations
Incorporated
Consolidated Statements of
Cash Flows
Six Months Ended June
30,
2019
2018
(unaudited)
Cash flows provided by/(used in)
operating activities
Net income
$
1,966,171
$
1,216,003
Adjustments to reconcile net income to net
cash provided by/(used in) operating activities
Depreciation and amortization
1,165,609
622,577
Share-based compensation
720,649
212,149
Bad debt expense
—
6,000
Gain on sale of discontinued operations,
net of tax
—
(1,000
)
Accounts receivable
712,805
(1,522,604
)
Contract assets
(721,315
)
(645,824
)
Inventory
(161,196
)
(482,194
)
Other current assets
(17,483
)
164,809
Accounts payable and accrued expenses
(2,313,551
)
(253,372
)
Contract liabilities
(234,854
)
(2,053,566
)
Net cash provided by/(used in) operating
activities
1,116,835
(2,737,022
)
Cash flows used in investing
activities
Acquisition of property and equipment
(405,795
)
(198,012
)
Intangible property costs
(136,852
)
(185,909
)
Acquisition of General Photonics
Corporation
(19,004,250
)
—
Proceeds from sale of property and
equipment
—
1,000
Net cash used in investing activities
(19,546,897
)
(382,921
)
Cash flows used in financing
activities
Payments on finance lease obligations
(14,545
)
(25,309
)
Payments of debt obligations
(625,000
)
(916,665
)
Repurchase of common stock
(220,470
)
(466,894
)
Proceeds from the exercise of options and
warrants
367,483
840,078
Net cash used in financing activities
(492,532
)
(568,790
)
Net decrease in cash and cash
equivalents
(18,922,594
)
(3,688,733
)
Cash and cash equivalents-beginning of
period
42,460,267
36,981,533
Cash and cash equivalents-end of
period
$
23,537,673
$
33,292,800
Luna Innovations
Incorporated
Reconciliation of Net Income
to EBITDA and Adjusted EBITDA
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(unaudited)
(unaudited)
Net income
$
840,292
$
1,067,328
$
1,966,171
$
1,216,003
Less income from discontinued operations,
net of income tax
—
768,100
—
1,188,853
Net income from continuing operations
840,292
299,228
1,966,171
27,150
Interest expense
52
34,484
12,775
75,131
Investment income
(76,813
)
(99,844
)
(268,020
)
(175,756
)
Tax expense/(benefit)
247,373
(38,269
)
(1,617,774
)
(115,236
)
Depreciation and amortization
652,585
236,594
1,165,609
473,960
EBITDA
1,663,489
432,193
1,258,761
285,249
Share-based compensation
377,884
117,543
720,649
212,149
Non-recurring charges (1)
43,674
—
941,716
—
Amortization of inventory step-up
310,611
—
414,148
—
Adjusted EBITDA
$
2,395,658
$
549,736
$
3,335,274
$
497,398
(1) Non-recurring charges consist of
transaction-related expenses incurred during the six months ended
June 30, 2019, related to the acquisition of General Photonics.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190807005849/en/
Investor Contacts: Jane
Bomba Luna Innovations Incorporated Phone: 303-829-1211 Email:
IR@lunainc.com
Sally J. Curley Luna Innovations Incorporated 614-530-3002
IR@lunainc.com
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