Net loss improved to $(1.4) million for the
three months ended March 31, 2017 compared to $(1.5) million for
the three months ended March 31, 2016
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the three months ended March 31,
2017.
For the three months ended March 31, 2017, Luna reported
revenues of $13.1 million and a net loss of $(1.4) million compared
to revenues of $14.0 million and a net loss of $(1.5) million for
the three months ended March 31, 2016. Adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA")
was $0.1 million for the three months ended March 31, 2017 and
2016. A reconciliation of net loss to Adjusted EBITDA can be found
in the schedules included in this release.
“As we described last quarter, with the transition to a new
vendor managed inventory arrangement with our largest customer in
Asia as of January 1, 2017, we shipped fewer of our 100G integrated
coherent receivers during the first quarter of 2017 than we did in
the first quarter of 2016. As a result, our overall products and
licensing revenue declined year over year," said My Chung,
president and chief executive officer of Luna. "We anticipate the
market for 100G products to return to significant growth in the
second half of this year, driven by the build-out of metro networks
in China and the adoption of our second generation 100G integrated
coherent receivers. We remain focused on the execution of our key
strategic growth initiatives, and continue to be excited about the
growth opportunities they provide for the full year of 2017 and
beyond."
First Quarter Financial
Summary
Total revenues for the three months ended March 31, 2017
were $13.1 million compared to $14.0 million for the three months
ended March 31, 2016. Technology development revenues
increased 15% to $4.3 million for the three months ended March 31,
2017, compared to $3.7 million for the three months ended March 31,
2016. Products and licensing revenues were $8.8 million for the
three months ended March 31, 2017, compared to $10.3 million
for the three months ended March 31, 2016. The decline in products
and licensing revenues year over year resulted primarily from lower
sales of 100G receivers in Asia compared to the first quarter of
the previous year as Luna transitioned to a new vendor managed
inventory arrangement with its largest customer in that region.
Gross profit was $4.7 million, or 36% of revenues, for the three
months ended March 31, 2017, compared to gross profit of $4.8
million, or 35% of revenues, for the three months ended
March 31, 2016.
Selling, general and administrative expenses were $4.5 million
for the three months ended March 31, 2017, compared to $4.6
million for the three months ended March 31, 2016.
Research, development and engineering expenses decreased to $1.4
million for the three months ended March 31, 2017 compared to $1.6
million for the three months ended March 31, 2016.
Operating loss improved to $(1.3) million for the three months
ended March 31, 2017, compared to an operating loss of $(1.4)
million for the three months ended March 31, 2016. Net loss
attributable to common stockholders improved to $(1.4) million for
the three months ended March 31, 2017, compared to a net loss
attributable to common stockholders of $(1.5) million for the three
months ended March 31, 2016. Adjusted EBITDA was unchanged at
$(0.1) million for the three months ended March 31, 2017 and
2016.
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 5:00 p.m. (EDT) today to discuss its financial
results for the three months ended March 31, 2017, 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 18890708.
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 speed
optoelectronics and 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 Luna’s future financial performance,
the significant growth of the market for Luna's 100G products in
the second half of 2017, the adoption of Luna's second generation
100G integrated coherent receivers, and additional potential growth
opportunities. 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, technological 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 March 31, 2017
2016 (unaudited) Revenues: Technology
development $ 4,276,448 $ 3,723,262 Products and licensing
8,841,936 10,263,753 Total revenues 13,118,384
13,987,015 Cost of revenues: Technology development
3,222,354 2,846,723 Products and licensing 5,220,775
6,296,685 Total cost of revenues 8,443,129 9,143,408
Gross profit 4,675,255 4,843,607 Operating
expense: Selling, general and administrative 4,495,701 4,645,282
Research, development and engineering 1,444,828 1,550,491
Total operating expense 5,940,529 6,195,773
Operating loss (1,265,274 ) (1,352,166 ) Other income (expense):
Other income, net 351 3,940 Interest expense (64,374 ) (86,173 )
Total other expense (64,023 ) (82,233 ) Loss before income taxes
(1,329,297 ) (1,434,399 ) Income tax expense 26,690 25,175
Net loss (1,355,987 ) (1,459,574 ) Preferred stock dividend
34,096 21,210 Net loss attributable to common
stockholders $ (1,390,083 ) $ (1,480,784 ) Net loss per share
attributable to common stockholders: Basic and diluted $ (0.05 ) $
(0.05 ) Weighted average common shares and common equivalent shares
outstanding: Basic and diluted 27,541,356 27,477,181
Luna Innovations Incorporated
Consolidated Balance Sheets
March 31, 2017 December 31, 2016
(unaudited) Assets Current assets: Cash and cash
equivalents $ 12,105,934 $ 12,802,458 Accounts receivable, net
12,256,152 14,297,725 Inventory 8,722,670 8,370,235 Prepaid
expenses and other current assets 1,536,003 1,627,175
Total current assets 34,620,759 37,097,593 Property and equipment,
net 6,575,200 6,780,838 Intangible assets, net 8,280,903 8,681,263
Goodwill 2,348,331 2,348,331 Other assets 68,778 88,948
Total assets $ 51,893,971 $ 54,996,973
Liabilities and stockholders’ equity Liabilities: Current
Liabilities: Current portion of long-term debt obligations $
1,833,333 $ 1,833,333 Current portion of capital lease obligations
53,043 52,128 Accounts payable 3,147,754 4,466,192 Accrued
liabilities 8,672,431 8,667,100 Deferred revenue 843,345
949,603 Total current liabilities 14,549,906 15,968,356
Long-term deferred rent 1,372,356 1,403,957 Long-term debt
obligations 1,965,776 2,420,032 Long-term capital lease obligations
101,328 114,940
Total liabilities 17,989,366
19,907,285 Commitments and contingencies
Stockholders’ equity: Preferred stock, par value $0.001, 1,321,514
shares authorized, issued and outstanding at March 31, 2017 and
December 31, 2016 1,322 1,322 Common stock, par value $0.001,
100,000,000 shares authorized, 27,989,104 and 27,988,104 shares
issued, 27,542,277 and 27,541,277 shares outstanding at March 31,
2017 and December 31, 2016 28,621 28,600 Treasury stock at cost,
446,827 shares at March 31, 2017 and December 31, 2016 (517,987 )
(517,987 ) Additional paid-in capital 82,656,937 82,451,958
Accumulated deficit (48,264,288 ) (46,874,205 )
Total
stockholders’ equity 33,904,605 35,089,688
Total liabilities and stockholders’ equity $ 51,893,971
$ 54,996,973
Luna Innovations Incorporated
Consolidated Statements of Cash
Flows
Three Months Ended March 31, 2017
2016 (unaudited) Cash flows provided by/(used in)
operating activities Net loss $ (1,355,987 ) $ (1,459,574 )
Adjustments to reconcile net loss to net cash provided by/(used in)
operating activities Depreciation and amortization 956,687 939,799
Share-based compensation 170,084 258,803 Bad debt expense 29,671 —
Change in assets and liabilities Accounts receivable 2,011,902
(298,309 ) Inventory (352,435 ) 20,375 Other current assets 55,092
(376,642 ) Accounts payable and accrued expenses (1,313,107 )
(721,289 ) Deferred revenue (137,859 ) 92,259 Net cash
provided by/(used in) operating activities 64,048 (1,544,578
)
Cash flows used in investing activities Acquisition of
property and equipment (157,308 ) (138,099 ) Intangible property
costs (133,054 ) (101,467 ) Net cash used in investing activities
(290,362 ) (239,566 )
Cash flows used in financing
activities Payments on capital lease obligations (12,697 )
(20,106 ) Payments of debt obligations (458,333 ) (458,334 )
Proceeds from the exercise of options 820 — Net cash
used in financing activities (470,210 ) (478,440 )
Net decrease
in cash or cash equivalents (696,524 ) (2,262,584 ) Cash and
cash equivalents-beginning of period 12,802,458 17,464,040
Cash and cash equivalents-end of period $ 12,105,934
$ 15,201,456
Luna Innovations Incorporated
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Three Months Ended March 31, 2017
2016 (unaudited) Net loss $ (1,355,987 ) $
(1,459,574 ) Interest expense 64,374 86,173 Tax expense 26,690
25,175 Depreciation and amortization 956,687 939,799
EBITDA (308,236 ) (408,427 ) Share-based compensation 170,084
258,803 Non-recurring merger-related charges — —
Adjusted EBITDA $ (138,152 ) $ (149,624 )
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version on businesswire.com: http://www.businesswire.com/news/home/20170511006214/en/
Investor Contact:Luna Innovations IncorporatedDale
Messick, CFO, 1 540-769-8400IR@lunainc.com
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