Company provides 2020 outlook
Highlights
- Total revenues of $19.5 million for the three months ended
December 31, 2019, up 44% compared to the three months ended
December 31, 2018
- Products and licensing revenues of $13.0 million for the
three months ended December 31, 2019, up 63% compared to the three
months ended December 31, 2018
- Net income from continuing operations of $2.1 million, or
$0.07 per fully diluted share, for the three months ended December
31, 2019, compared to $(0.1) million, or $0.00 per fully diluted
share, for the prior-year period
- Adjusted EBITDA improved to $3.2 million for the three
months ended December 31, 2019, compared to $1.6 million for the
three months ended December 31, 2018
- Fiscal 2019 total revenues of $70.5 million; Adjusted EBITDA
more than triples vs. prior year
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced optical technology, today announced its financial results
for the three months and full fiscal year ended December 31,
2019.
“2019 marked an exceptional year for Luna, from both a financial
and an operational perspective, and was our ninth consecutive
quarter, and our second full fiscal year, of significant top- and
bottom-line growth,” said Scott Graeff, President and Chief
Executive Officer of Luna. “During the year, we achieved record
revenue and income from continuing operations while streamlining
our balance sheet through a conversion of preferred shares. We
completed a $2 million stock repurchase program and realigned the
organization for future growth, including the appointment of Gene
Nestro as CFO."
" As I reflect on these significant operational and financial
achievements, I am particularly struck by the efficient and rapid
integration of our two recent acquisitions, Micron Optics ("MOI")
and General Photonics ("GP"), and the immediate accretion they had.
I continue to be inspired by the focus and hard work of the Luna
team, all of whom provided our customers the products and services
to fit their unique needs. Our customers recognize and appreciate
our performance, as reflected by our strong 2019 results. We look
forward to an even stronger 2020.”
Fourth-Quarter Fiscal 2019 Financial
Summary
Financial results for the three months ended December 31, 2019
continue the strong momentum from throughout the fiscal year. These
results include a full quarter of the business of GP, acquired in
March 2019; fourth quarter 2018 did not include GP.
Highlights of the financial results for the three months ended
December 31, 2019 are:
Three Months Ended December
31,
(in thousands of U.S. Dollars, except per
share data)
2019
2018
Change
Revenues:
Products and licensing
$
13,032
$
7,990
63
%
Technology development
6,448
5,549
16
%
Total revenues
19,480
13,539
44
%
Gross profit
10,388
6,572
58
%
Gross margin
53.3
%
48.5
%
Operating expense
8,671
6,149
41
%
Operating income
1,717
423
306
%
Other income/(expense) and income
taxes
429
(546
)
Net income/(loss) from continuing
operations
$
2,146
$
(123
)
1,845
%
Diluted weighted average shares
outstanding (in thousands)
32,212
28,067
Net income per share from continuing
operations (diluted)
$
0.07
N/A
Adjusted EBITDA
$
3,237
$
1,552
109
%
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
December 31, 2019 increased compared to the prior year period due
to the inclusion of the incremental revenues associated with the
acquired operations of GP, as well as increased revenues associated
with Luna’s communications test and fiber optic sensing products.
Technology development revenues increased for the three months
ended December 31, 2019, compared to the prior-year period due to
growth in various government research programs. The increase in
operating expenses was due to the addition of GP's operating
expenses, as well as continued incremental investment in sales and
engineering to support Luna's growth. Pre-tax income from
continuing operations increased to $1.8 million for the three
months ended December 31, 2019, compared to $0.6 million for the
prior year fiscal quarter.
Net income from continuing operations was $2.1 million, or $0.07
per fully diluted share, for the three months ended December 31,
2019, compared to a loss of $0.1 million, or $0.00 per fully
diluted share, for the prior-year period. The income tax benefit
for the quarter and year ended December 31, 2019 includes income
tax benefits of $1.1 million and $3.3 million, respectively, due to
the release of valuation allowances on net operating loss
carryforwards. The increase in net income from continuing
operations was driven by Luna's increased revenue and strong
operating results.
Adjusted EBITDA was $3.2 million for the three months ended
December 31, 2019, compared to $1.6 million for the three months
ended December 31, 2018. The growth was driven by revenue growth
from both Luna’s legacy business and the MOI and GP acquisitions,
as well as prudent expense management.
Full-Year Fiscal 2019 Financial
Summary
Highlights of the financial results for the twelve months ended
December 31, 2019 are:
Full Year Ended December 31,
(in thousands of U.S. Dollars, except per
share data)
2019
2018
Change
Revenues:
Products and licensing
$
44,491
$
21,950
103
%
Technology development
26,025
20,968
24
%
Total revenues
70,516
42,918
64
%
Gross profit
35,182
19,438
81
%
Gross margin
49.9
%
45.3
%
Operating expense
31,867
18,560
72
%
Operating income
3,315
878
Other income and income taxes
2,028
360
Net income from continuing operations
$
5,343
$
1,238
332
%
Diluted weighted average shares
outstanding (in thousands)
31,841
32,452
Net income per share from continuing
operations (diluted)
$
0.17
$
0.04
325
%
Adjusted EBITDA
$
9,473
$
3,148
201
%
A reconciliation of Adjusted EBITDA to net income can be found
in the schedules included in this release. Note that revenue and
expenses related to Luna's Optoelectronics business, as well as the
gain recognized on the sale of that business in July 2018, were
classified as discontinued operations in Luna's results of
operations beginning in its quarter ended September 30, 2018.
Accordingly, net income for fiscal 2018 includes income from
discontinued operations. Income from discontinued operations
totaled $1.1 million in the fourth-quarter fiscal 2018 and $9.8
million for fiscal 2018. As a reminder, the fourth-quarter fiscal
2019 was the last quarter in which discontinued operations
comparisons related to Luna’s optoelectronic business and the gain
related to the sale of that business were relevant.
2020 Full-Year Outlook:
For fiscal year 2020, Luna expects:
- Total revenues in the range of $81 million to $84 million for
full fiscal 2020; and
- Adjusted EBITDA in the range of $10 million to $12 million for
full fiscal 2020.
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 months and full year ended December 31, 2019.
The investor conference call will be available via live webcast on
the Luna website at www.lunainc.com under the tab “Investor
Relations.” To participate by telephone, the domestic dial-in
number is 844.578.9643 and the international dial-in number is
270.823.1522. The participant access code is 6020329. Investors are
advised to dial in at least five minutes prior to the call to
register. The webcast will be archived on the company’s website
under “Webcasts and Presentations” for 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 2020 financial results
and outlook and growth potential. 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, 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 (in thousands of U.S.
Dollars, except per share data)
Three months ended December
31,
Year ended December
31,
2019
2018
2019
2018
Revenues:
Products and licensing revenues
$
13,032
$
7,990
$
44,491
$
21,950
Technology development revenues
6,448
5,548
26,025
20,967
Total revenues
19,480
13,538
70,516
42,917
Cost of revenues:
Products and licensing costs
4,317
2,698
16,684
8,079
Technology development costs
4,775
4,268
18,650
15,400
Total cost of revenues
9,092
6,966
35,334
23,479
Gross profit
10,388
6,572
35,182
19,438
Operating expense:
Selling, general and administrative
6,415
4,896
24,371
14,794
Research, development and engineering
2,255
1,253
7,496
3,766
Total operating expense
8,670
6,149
31,867
18,560
Operating income
1,718
423
3,315
878
Other expense:
Other expense, net
(1
)
(1
)
(5
)
(17
)
Investment income
69
199
394
549
Interest expense, net
(1
)
(21
)
(16
)
(124
)
Total other income
67
177
373
408
Income from continuing operations before
income taxes
1,785
600
3,688
1,286
Income tax benefit/(expense)
361
(722
)
1,655
(48
)
Income/(loss) from continuing
operations
2,146
(122
)
5,343
1,238
Income from discontinued operations, net
of income taxes
—
1,062
—
9,766
Net income
2,146
940
5,343
11,004
Preferred stock dividend
—
67
286
257
Net income attributable to common
stockholders
$
2,146
$
873
$
5,057
$
10,747
Net income per share from continuing
operations:
Basic
$
0.07
$
—
$
0.19
$
0.04
Diluted
$
0.07
$
—
$
0.17
$
0.04
Net income per share from discontinued
operations:
Basic
$
—
$
0.04
$
—
$
0.35
Diluted
$
—
$
0.04
$
—
$
0.30
Net income per share attributable to
common stockholders:
Basic
$
0.07
$
0.03
$
0.18
$
0.39
Diluted
$
0.07
$
0.03
$
0.16
$
0.33
Weighted average shares (in
thousands):
Basic
30,159
28,067
28,689
27,596
Diluted
32,212
28,067
31,841
32,452
Luna Innovations Incorporated
Consolidated Balance Sheets (in thousands of U.S Dollars)
December 31, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
25,006
$
42,460
Accounts receivable, net
16,269
13,037
Receivable from sale of HSOR business
2,501
2,500
Contract assets
2,759
2,422
Inventory, net
10,294
6,874
Prepaid expenses
1,287
935
Total current assets
58,116
68,228
Property and equipment, net
3,466
3,628
Intangible assets, net
10,194
3,302
Goodwill
10,542
101
Long term contract assets
449
337
Other assets
3,757
2
Total assets
86,524
75,598
Liabilities and stockholders’
equity
Current liabilities:
Current portion of long term debt
obligation
$
—
$
619
Current portion of capital lease
obligation
—
41
Accounts payable
2,787
2,396
Accrued liabilities
10,369
6,597
Contract liabilities
3,888
2,486
Total current liabilities
17,044
12,139
Long-term deferred rent
—
1,036
Other long-term liabilities
2,011
—
Long-term capital lease obligation
—
69
Total liabilities
19,055
13,244
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001,
1,321,514 shares authorized, 0 and 1,321,514 shares issued and
outstanding at December 31, 2019 and 2018, respectively
—
1
Common stock, par value $0.001,
100,000,000 shares authorized, 31,788,896 and 29,209,506 shares
issued, 30,149,105 and 27,956,401 shares outstanding at December
31, 2019 and 2018, respectively
32
30
Treasury stock at cost, 1,639,791 and
1,253,105 shares at December 31, 2019 and 2018, respectively
(4,337
)
(2,117
)
Additional paid-in capital
88,022
85,745
Accumulated deficit
(16,248
)
(21,305
)
Total stockholders’ equity
67,469
62,354
Total liabilities and stockholders’
equity
$
86,524
$
75,598
Luna Innovations Incorporated
Consolidated Statements of Cash Flows (in thousands of U.S.
Dollars)
Year ended December
31,
2019
2018
Cash flows provided by/(used in)
operating activities:
Net income
$
5,343
$
11,004
Adjustments to reconcile net income to net
cash provided by/(used in) operating activities:
Depreciation and amortization
2,503
1,219
Stock-based compensation
1,544
628
Gain on disposal of fixed assets
—
(1
)
Gain on sale of discontinued operations,
net of income taxes
—
(8,596
)
Tax benefit from release of valuation
allowance
(3,349
)
—
Bad debt
538
6
Changes in operating assets and
liabilities:
Accounts receivable
(2,249
)
(6,240
)
Contract assets
(449
)
(762
)
Inventory
(723
)
(968
)
Other assets
(242
)
1,850
Other long-term assets
45
—
Accounts payable and accrued expenses
592
(462
)
Contract liabilities
1,245
(986
)
Net cash provided by/(used in) operating
activities
4,798
(3,308
)
Cash flows (used in)/provided by
investing activities:
Acquisition of property and equipment
(541
)
(387
)
Proceeds from sale of property and
equipment
—
1
Intangible property costs
(270
)
(375
)
Acquisition of General Photonics
Corporation
(19,004
)
—
Acquisition of Micron Optics
—
(5,002
)
Proceeds from sale of discontinued
operations, net
—
15,800
Net cash (used in)/provided by investing
activities
(19,815
)
10,037
Cash flows used in financing
activities:
Payments on debt obligations
(625
)
(1,833
)
Payments on finance lease obligation
(40
)
(47
)
Purchase of treasury stock
(2,220
)
(467
)
Proceeds from the exercise of options
448
1,097
Net cash used in financing activities
(2,437
)
(1,250
)
Net change in cash and cash
equivalents
(17,454
)
5,478
Cash and cash equivalents—beginning of
period
42,460
36,982
Cash and cash equivalents—end of
period
$
25,006
$
42,460
Luna Innovations Incorporated
Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in
thousands of U.S. Dollars)
Three months ended December
31,
Year ended December
31,
2019
2018
2019
2018
Net income
$
2,146
$
940
$
5,343
$
11,004
Less income from discontinued operations,
net of income taxes
—
1,062
—
9,766
Net income/(loss) from continuing
operations
2,146
(122
)
5,343
1,238
Income tax (benefit)/expense
(361
)
722
(1,654
)
48
Income from continuing operations before
income taxes
1,785
600
3,689
1,286
Investment income
(69
)
(199
)
(394
)
(550
)
Interest expense
1
21
16
124
Depreciation and amortization
668
197
2,503
909
EBITDA
2,385
619
5,814
1,769
Share-based compensation
404
182
1,544
628
Non-recurring charges
448
751
2,115
751
Adjusted EBITDA
$
3,237
$
1,552
$
9,473
$
3,148
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200305005824/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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