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8-K - FORM 8-K - LUNA INNOVATIONS INCd434502d8k.htm

Exhibit 99.1

 

  LOGO   

        News Release

        Luna Innovations Incorporated

        1 Riverside Circle, Suite 400

        Roanoke, VA 24016

 

Luna Reports Third Quarter 2012 Financial Results

Products and licensing revenues increase 18% over prior year quarter; Total revenues

decrease 9% from prior year quarter

(ROANOKE, VA, November 8, 2012) – Luna Innovations Incorporated (NASDAQ: LUNA) today announced its financial results for the third quarter and nine months ended September 30, 2012.

For the three months ended September 30, 2012, the Company reported a net loss attributable to common stockholders of $0.3 million compared to net income to common stockholders of $0.2 million for the third quarter of 2011.

Total revenues decreased by 9%, from $8.8 million in the third quarter of 2011 to $8.0 million in the third quarter of 2012. Products and licensing revenues increased by 18%, from $2.7 million in the third quarter of 2011 to $3.2 million in the third quarter of 2012, due to increased sales of the Company’s new ODiSI product line. Revenues in the Company’s technology development segment declined by 21% from $6.2 million in the third quarter of 2011 to $4.9 million in the third quarter of 2012, primarily due to lower revenues in the Company’s Secure Computing and Communications group, where several short-term projects benefitted the group’s third quarter 2011 revenues. Gross profit decreased from $3.5 million for the third quarter of 2011 to $3.1 million for the third quarter of 2012.

Adjusted EBITDA, a non-GAAP measure, which is earnings before interest, taxes, and non-cash expenses of share-based compensation, depreciation, amortization and warrant expense, declined to $0.7 million for the third quarter of 2012, as compared to $1.1 million for the third quarter of 2011. Cash at September 30, 2012 of $6.7 million represents an increase of $0.1 million from $6.6 million at June 30, 2012.

“I am pleased with the successes we continue to make on each of our key strategic growth initiatives,” said My Chung, president and chief executive officer. “In addition to our continuing progress in our fiber optic shape sensing and secure computing initiatives, the introduction of

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 2

 

our ODiSI line of products for strain measurement earlier this year drove the incremental products and licensing revenues we generated this quarter. We are encouraged that our customers are embracing our technology and remain optimistic that the growing composite test market will continue to provide diversity in our revenue sources.”

Third Quarter Financial and Business Summary

 

 

Total revenues decreased by 9%, to $8.0 million for the third quarter of 2012, from $8.8 million for the third quarter of 2011.

 

 

Products and licensing revenues increased by 18%, to $3.2 million in the third quarter of 2012, from $2.7 million in the third quarter of 2011.

 

 

Technology development revenues decreased by 21%, to $4.9 million for the third quarter of 2012, from $6.2 million for the third quarter of 2011.

 

 

Gross profit decreased to $3.1 million, or 39% of total revenues, for the third quarter of 2012, from $3.5 million, or 40% of total revenues, for the third quarter of 2011.

 

 

Selling, general and administrative expenses increased by 16% to $2.7 million, or 33% of total revenues for the third quarter of 2012, from $2.3 million, or 26% of total revenues, for the third quarter of 2011.

 

 

Total operating expenses increased to $3.3 million, or 41% of total revenues, for the third quarter of 2012, from $3.2 million, or 36% of total revenues for the third quarter of 2011.

 

 

Adjusted EBITDA decreased to $0.7 million for the third quarter of 2012, from $1.1 million for the third quarter of 2011.

 

 

Net loss attributable to common stockholders declined to $0.3 million, or a loss of $0.02 per basic and diluted common share, for the third quarter of 2012, compared to a net income attributable to common stockholders of $0.2 million, or income of $0.02 per basic common share and $0.01 per diluted common share, for the third quarter of 2011.

 

 

Cash and cash equivalents totaled $6.7 million at September 30, 2012, as compared to $6.6 million at June 30, 2012 and $8.9 million at December 31, 2011.

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 3

 

 

Introduced a new lower cost optical backscatter reflectometer, the OBR 5T-50, expanding our product offering in the fiber-optic testing market by directly addressing the needs of manufacturing production lines, as well as university labs and research facilities.

 

 

Received full accreditation by the U.S. Department of Defense as a Trusted Integrated Circuit Supplier through our Secure Computing and Communications group.

Nine Months Ended September 30, 2012 Financial Summary

 

 

Total revenues decreased $2.9 million, or 10%, to $24.6 million for the nine months ended September 30, 2012, compared to $27.5 million for the nine months ended September 30, 2011.

 

 

Products and licensing revenues decreased by 13%, to $8.7 million for the nine months ended September 30, 2012, from $10.1 million for the nine months ended September 30, 2011.

 

 

Technology development revenues decreased by 9%, to $15.9 million for the nine months ended September 30, 2012, from $17.4 million for the nine months ended September 30, 2011.

 

 

Gross profit decreased by 9%, to $9.5 million for the nine months ended September 30, 2012, from $10.5 million for the nine months ended September 30, 2011.

 

 

Selling, general and administrative expenses decreased by 12% to $8.2 million, or 33% of total revenues, for the nine months ended September 30, 2012, from $9.3 million, or 34% of total revenues, for the nine months ended September 30, 2011.

 

 

Total operating expenses decreased by 10% to $10.2 million, or 41% of total revenues, for the nine months ended September 30, 2012, from $11.3 million, or 41% of total revenues, for the nine months ended September 30, 2011.

 

 

Adjusted EBITDA decreased to $1.7 million for the nine months ended September 30, 2012, from $2.1 million for the nine months ended September 30, 2011.

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 4

 

 

Net loss attributable to common stockholders improved to $0.9 million, or a loss of $0.06 per basic and diluted common share, for the nine months ended September 30, 2012, compared to a net loss attributable to common stockholders of $1.1 million, or a loss of $0.08 per basic and diluted common share, for the nine months ended September 30, 2011.

Non-GAAP Measures

In evaluating the operating performance of its business, Luna’s management excludes certain charges and credits that are required by generally accepted accounting principles (“GAAP”). These non-GAAP results provide useful information to both management and investors by excluding items that the company believes may not be indicative of its operating performance, because either they are unusual and the company 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. These non-GAAP measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have 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. (EST) today to discuss its financial results and business developments for the third quarter of 2012 and expectations for the remainder of 2012. The call can be accessed by dialing 866.700.7101 domestically or 617.213.8837 internationally prior to the start of the call. The participant access code is 19063914. 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 focused on sensing and instrumentation. Luna develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. The company’s products are used to measure, monitor, protect and improve critical processes in the markets we serve. Through its disciplined commercialization business model, Luna has become a recognized leader in transitioning science to solutions. Luna is headquartered in Roanoke, Virginia.

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 5

 

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 our expectations regarding the demand for the company’s fiber optic equipment and technologies and the company’s technical capabilities. 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 the company 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 the company’s products and services to meet expectations, technological challenges and those risks and uncertainties set forth in the company’s periodic reports and other filings with the Securities and Exchange Commission. Such filings are available at the SEC’s website at www.sec.gov and at the company’s website at www.lunainc.com. The statements made in this release are based on information available to the company 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.

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 6

 

Luna Innovations Incorporated

Condensed Consolidated Statements of Operations

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     2012     2011  
     (unaudited)     (unaudited)  

Revenues:

        

Technology development revenues

   $ 4,874,826      $ 6,161,826      $ 15,868,642      $ 17,406,515   

Products and licensing revenues

     3,155,953        2,681,184        8,715,630        10,058,709   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     8,030,779        8,843,010        24,584,272        27,465,224   

Cost of revenues:

        

Technology development costs

     3,577,476        3,630,163        11,248,453        11,910,771   

Products and licensing costs

     1,307,285        1,719,039        3,821,980        5,059,507   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     4,884,761        5,349,202        15,070,433        16,970,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     3,146,018        3,493,808        9,513,839        10,494,946   

Operating expense:

        

Selling, general and administrative

     2,665,454        2,303,325        8,183,632        9,340,545   

Research, development, and engineering

     654,566        877,741        1,968,877        1,950,275   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

     3,320,020        3,181,066        10,152,509        11,290,820   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss)/income

     (174,002     312,742        (638,670 )     (795,874 )

Other income/(expense):

        

Other income, net

     37,866        21,953        85,083        57,793   

Interest expense

     (68,455 )     (91,908 )     (222,473 )     (290,634 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income/(expense)

     (30,589 )     (69,955 )     (137,390 )     (232,841 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Income/(Loss) before income taxes

     (204,591     242,787        (776,060 )     (1,028,715 )

Income tax expense

     15,618        287        21,417        10,307   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss)/income

     (220,209     242,500        (797,477 )     (1,039,022 )

Preferred stock dividend

     34,095        20,616        94,974        94,952   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss)/income attributable to common stockholders

   $ (254,304   $ 221,884      $ (892,451 )   $ (1,133,974 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss)/income per share:

        

Basic

   $ (0.02   $ 0.02      $ (0.06 )   $ (0.08 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.02   $ 0.01      $ (0.06   $ (0.08
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares:

        

Basic

     13,939,938        13,669,724        13,903,809        13,598,249   

Diluted

     13,939,938        15,898,639        13,903,809        13,598,249   

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 7

 

Luna Innovations Incorporated

Condensed Consolidated Balance Sheets

 

     September 30,
2012
    December 31,
2011
 
     (unaudited)        

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 6,722,311      $ 8,939,127   

Accounts receivable, net

     7,729,108        5,958,086   

Inventory, net

     3,569,999        3,330,773   

Prepaid expenses

     962,612        1,071,438   

Other current assets

     36,717        35,717   
  

 

 

   

 

 

 

Total current assets

     19,020,747        19,335,141   

Property and equipment, net

     2,470,723        2,816,674   

Intangible assets, net

     449,477        539,563   

Other assets

     171,668        228,043   
  

 

 

   

 

 

 

Total assets

   $ 22,112,615      $ 22,919,421   
  

 

 

   

 

 

 

Liabilities and stockholder’s equity

    

Liabilities:

    

Current Liabilities:

    

Current portion of long term-debt obligation

     1,625,000        1,625,000   

Current portion of capital lease obligation

     53,288        50,949   

Accounts payable

     2,357,536        1,656,602   

Accrued liabilities

     2,927,932        3,612,193   

Deferred credits

     1,103,353        1,462,603   
  

 

 

   

 

 

 

Total current liabilities

     8,067,109        8,407,347   

Long-term debt obligation

     2,500,000        3,625,000   

Long-term lease obligation

     142,745        183,008   
  

 

 

   

 

 

 

Total liabilities

     10,709,854        12,215,355   

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock

     1,322        1,322   

Common stock

     14,221        13,969   

Additional paid-in capital

     60,880,410        59,289,516   

Accumulated deficit

     (49,493,192 )     (48,600,741 )
  

 

 

   

 

 

 

Total stockholders’ equity

     11,402,761        10,704,066   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 22,112,615      $ 22,919,421   
  

 

 

   

 

 

 

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 8

 

Luna Innovations Incorporated

Condensed Consolidated Statements of Cash Flows

 

     Nine months ended
September 30,
 
     2012     2011  
     (unaudited)  

Cash flows (used in)/provided by operating activities

    

Net loss

   $ (797,477 )   $ (1,039,022 )

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     814,498        1,042,700   

Share-based compensation

     1,411,672        1,737,220   

Warrant expense

     52,889        41,752   

Changes in assets and liabilities:

    

Accounts receivable

     (1,771,022 )     (239,167

Inventory

     (243,565 )     (463,666 )

Other current assets

     107,826        (174,249

Other assets

     56,375        56,375   

Accounts payable and accrued expenses

     (36,216 )     (223,648 )

Deferred credits

     (359,250     (174,040
  

 

 

   

 

 

 

Net cash (used in)/provided by operating activities

     (764,270     564,255   
  

 

 

   

 

 

 

Cash flows used in investing activities

    

Acquisition of property and equipment

     (242,396 )     (289,777 )

Intangible property costs

     (131,727 )     (272,741 )
  

 

 

   

 

 

 

Net cash used in investing activities

     (374,123 )     (562,518 )
  

 

 

   

 

 

 

Cash flows used in financing activities

    

Payments on capital lease obligations

     (37,924 )     (30,115 )

Proceeds from debt obligations

     —          6,000,000   

Payment of debt obligations

     (1,125,000 )     (6,617,393 )

Proceeds from the exercise of options and warrants

     84,501        262,641   
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,078,423 )     (384,867
  

 

 

   

 

 

 

Net change in cash

     (2,216,816     (383,130

Cash and cash equivalents—beginning of period

     8,939,127        7,216,580   
  

 

 

   

 

 

 

Cash and cash equivalents—end of period

   $ 6,722,311      $ 6,833,450   
  

 

 

   

 

 

 

 

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LUNA INNOVATIONS INCORPORATED    Luna Q312 Earnings, Page 9

 

Luna Innovations Incorporated

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2012     2011      2012     2011  
     (unaudited)      (unaudited)  

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:

         

Net income (loss)

   $ (220,209   $ 242,500       $ (797,477 )   $ (1,039,022 )

Interest expense

     68,455        91,908         222,473        290,634   

Income tax expense

     15,618        287         21,417        10,307   

Depreciation and amortization

     286,386        332,432         814,498        1,042,700   
  

 

 

   

 

 

    

 

 

   

 

 

 

EBITDA

     150,250        667,127         260,911        304,619   

Stock-based compensation and warrant expense

     524,161        462,073         1,464,561        1,778,972   
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 674,411      $ 1,129,200       $ 1,725,472      $ 2,083,591   
  

 

 

   

 

 

    

 

 

   

 

 

 

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Investor Contact:

Dale Messick, CFO

Luna Innovations Incorporated

Phone: 1.540.769.8400

Email: IR@lunainc.com