Luna Innovations Reports Fourth Quarter and Full Year 2011 Financial Results
Positive operating cash flow $2.4 million for the quarter; Total revenues decrease 10% from prior year quarter; Annual revenues increase 3% over prior year; Loss attributable to common shareholders improves $1.5 million for full year
ROANOKE, Va.--Mar. 8, 2012--Luna Innovations Incorporated (NASDAQ: LUNA) today announced its financial results for the fourth quarter and year endedDecember 31, 2011.
For the fourth quarter of 2011, Luna realized a net loss attributable to common shareholders of$0.4 million, compared to a net loss attributable to common shareholders of$0.5 millionfor the fourth quarter of 2010. Revenues decreased to$8.1 millionin the fourth quarter of 2011 from$9.1 millionin the fourth quarter of the preceding year, with a corresponding reduction in gross profit to$2.7 millionfor the most recent quarter compared to$3.4 millionin the prior year quarter. This decline was largely offset by an improvement of 27% in operating expenses, which totaled$3.2 millionin the last quarter of 2011 compared to$3.7 millionin the fourth quarter of 2010. Additionally, the company generated positive operating cash flow of$2.4 millionfor the fourth quarter of 2011.
For the year, total revenues increased 3% compared to 2010, driven by a 9% growth in product and license revenue. Total revenues grew to$35.6 millionfor 2011 compared to$34.5 millionin 2010, including an increase in product and license revenue to$13.2 millionin 2011 compared to$12.1 millionin 2010. Full year revenues in the company’s technology development segment were unchanged at$22.4 millionin 2011 and in 2010. Gross profit increased to$13.2 millionfor 2011 compared to gross profit of$12.9 millionin 2010. Net loss attributable to common shareholders improved 49% to$1.5 million, or$0.11per common share, for 2011 versus a net loss attributable to common shareholders of$3.0 million, or$0.23per common share, for 2010.
Adjusted EBITDA, a non-GAAP measure, which is earnings before interest, taxes, depreciation and amortization, excluding litigation and reorganization related items and non-cash stock-based compensation and warrant expense, decreased to$2.6 millionfor 2011 from$2.8 millionin 2010.
“I am pleased with our return to positive cash flow and bottom line improvement in the fourth quarter as the quarterly decline in revenue we had expected was realized,” saidMy Chung, chief executive officer of Luna. “As we move ahead into 2012 with a still uncertain economy, we will remain focused on our strategic initiatives in fiber optic sensing and secure computing opportunities to deliver value to our shareholders.”
Fourth Quarter Financial and Business Summary
-- Total revenues decreased by 10%, to$8.1 millionfor the fourth quarter of 2011, from$9.1 millionfor the fourth quarter of 2010.
-- Technology development revenues decreased by 8%, to$5.0 millionfor the fourth quarter of 2011, from$5.5 millionfor the fourth quarter of 2010.
-- Product and license revenue decreased by 13%, to$3.1 millionin the fourth quarter of 2011, from$3.6 millionin the fourth quarter of 2010, reflecting lower sales of fiber optic test and measurement equipment.
-- Gross profit decreased to$2.7 millionfor the fourth quarter of 2011, from$3.4 millionfor the fourth quarter of 2010.
-- Selling, general and administrative expenses decreased by 25% to$2.4 million, or 30% of total revenues for the fourth quarter of 2011, from$3.2 million, or 36% of total revenues, for the fourth quarter of 2010.
-- Total operating expenses decreased to$3.2 million, or 39% of total revenues, for the fourth quarter of 2011, from$3.7 million, or 41% of total revenues for the fourth quarter of 2010.
-- Adjusted EBITDA decreased to$0.6 millionfor the fourth quarter of 2011, from$1.0 millionfor the fourth quarter of 2010.
-- Net loss attributable to common shareholders improved to$0.4 million, or($0.03)per basic and diluted common share, for the fourth quarter of 2011, compared to a net loss attributable to common stockholders of$0.5 million, or($0.04)per basic and diluted common share, for the fourth quarter of 2010.
-- Cash and cash equivalents totaled$8.9 millionatDecember 31, 2011, as compared to$7.2 millionatDecember 31, 2010and$6.8 millionatSeptember 30, 2011.
Year Ended December 31, 2011 Financial Summary
-- Total revenue increased$1.1 million, or 3%, to$35.6 millionfor the year endedDecember 31, 2011, compared to$34.5 millionfor the year endedDecember 31, 2010.
-- Product and license revenue increased by 9%, to$13.2 millionfor the year endedDecember 31, 2011, from$12.1 millionfor the year endedDecember 31, 2010. Included in this growth was an increase of$0.4 millionin revenue for contracted product development activities, primarily related to fiber optic shape sensing and localization for minimally invasive surgery.
-- Technology development revenues were unchanged at$22.4 millionfor the year endedDecember 31, 2011and for the year endedDecember 31, 2010.
-- Gross profit increased by 2%, to$13.2 millionfor the year endedDecember 31, 2011, from$12.9 millionfor the year endedDecember 31, 2010.
-- Selling, general and administrative expenses decreased by 11% to$11.8 million, or 33% of total revenues, for the year endedDecember 31, 2011, from$13.3 million, or 39% of total revenues, for the year endedDecember 31, 2010.
-- Total operating expenses decreased by 5% to$14.5 million, or 41% of total revenues, for the year endedDecember 31, 2011, from$15.2 million, or 44% of total revenues, for the year endedDecember 31, 2010.
-- Adjusted EBITDA decreased to$2.6 millionfor the year endedDecember 31, 2011from$2.8 millionfor the year endedDecember 31, 2010.
-- Net loss attributable to common stockholders improved to$1.5 million, or$0.11per basic and diluted common share, for the year endedDecember 31, 2011, compared to a net loss attributable to common stockholders of$3.0 million, or$0.23per basic and diluted common share, for the year endedDecember 31, 2010.
--Awarded$12 millionmulti-year contract to advance the unique technology developed within the company’sSecure Computing and Communicationsgroup.
--Launched the ODiSI product for enhanced strain and temperature measurement using optical fiber. This new product will initially target customers in composites manufacturing and in energy.
Outlook for the First Quarter and Full Year 2012
Based on information as ofMarch 8, 2012, the company expects total revenue for 2012 to be in the range of$32.5 million to $37.0 million. Also for 2012, the company anticipates a net loss to common stockholders in the range of$0.2 million to $1.2 million. For the first quarter of 2012, the company expects revenue of approximately$8.0 million to $8.5 millionand a net loss attributable to common stockholders of approximately$0.2 million to $0.6 million.
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 Innovationswill conduct an investor conference call at 5:00 p.m. (EST)today to discuss its financial results and business developments for the fourth quarter and full year of 2011 and expectations for 2012. The call can be accessed by dialing 866.713.8565 domestically or 617.597.5324 internationally prior to the start of the call. The participant access code is 21120821. 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 Innovations website, www.lunainnovations.com, prior to the event. The webcast will be archived under the “Webcasts and Presentations” section of theLuna Innovations website for at least 30 days following the conference call.
About Luna Innovations:
Luna Innovations Incorporated(www.lunainnovations.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 inRoanoke, Virginia.
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 financial results for the first quarter and full year 2012, as well as the company’s focus on opportunities in fiber optic sensing and secure computing. 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 the fact that the outlook for the first quarter and full year 2012 could change, failure of demand for the company’s products and services to meet expectations, 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.lunainnovations.com. The statements made in this release are based on information available to the company as of the date of this release andLuna Innovations undertakes no obligation to update any of the forward-looking statements after the date of this release.
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Luna Innovations Incorporated |
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Condensed Consolidated Statements of Operations |
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December 31, |
December 31, |
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2011 |
2010 |
2011 |
2010 |
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| Revenues | |||||||||||||||||
| Technology development | $ | 5,011,387 | $ | 5,475,310 | $ | 22,417,902 | $ | 22,404,931 | |||||||||
| Product and license | 3,137,113 | 3,593,510 | 13,195,822 | 12,133,463 | |||||||||||||
| Total revenues | 8,148,500 | 9,068,820 | 35,613,724 | 34,538,394 | |||||||||||||
| Cost of revenues | |||||||||||||||||
| Technology development | 3,882,508 | 4,248,758 | 15,793,279 | 15,808,108 | |||||||||||||
| Product and license | 1,530,436 | 1,453,967 | 6,589,943 | 5,786,567 | |||||||||||||
| Total cost of revenues | 5,412,944 | 5,702,725 | 22,383,222 | 21,594,675 | |||||||||||||
| Gross profit | 2,735,556 | 3,366,095 | 13,230,502 | 12,943,719 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Selling, general and administrative | 2,448,321 | 3,246,191 | 11,788,866 | 13,297,705 | |||||||||||||
| Research, development and engineering | 724,455 | 451,701 | 2,674,730 | 1,694,643 | |||||||||||||
| Reorganization costs | - | 12,490 | - | 174,292 | |||||||||||||
| Total operating expenses | 3,172,776 | 3,710,382 | 14,463,596 | 15,166,640 | |||||||||||||
| Operating loss | (437,220 | ) | (344,287 | ) | (1,233,094 | ) | (2,222,921 | ) | |||||||||
| Other income (expense) | |||||||||||||||||
| Interest | (85,890 | ) | (122,163 | ) | (376,524 | ) | (474,408 | ) | |||||||||
| Other | 169,772 | 84,109 | 227,565 | 77,299 | |||||||||||||
| Loss before income taxes | (353,338 | ) | (382,341 | ) | (1,382,053 | ) | (2,620,030 | ) | |||||||||
| Income tax expense | - | - | 10,307 | - | |||||||||||||
| Net loss | (353,338 | ) | (382,341 | ) | (1,392,360 | ) | (2,620,030 | ) | |||||||||
| Preferred stock dividend | 32,510 | 93,000 | 127,462 | 360,631 | |||||||||||||
| Net loss attributable to common shareholders | $ | (385,848 | ) | $ | (475,341 | ) | $ | (1,519,822 | ) | $ | (2,980,661 | ) | |||||
| Net loss per share of common stock | |||||||||||||||||
| Basic and diluted | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.23 | ) | |||||
| Weighted average shares | |||||||||||||||||
| Basic and diluted | 13,794,361 | 13,360,809 | 13,647,555 | 13,009,326 | |||||||||||||
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Luna Innovations Incorporated |
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Condensed Consolidated Balance Sheets |
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December 31, |
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2011 |
2010 |
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(unaudited) |
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| Assets | |||||||||
| Current Assets | |||||||||
| Cash | $ | 8,939,127 | $ | 7,216,580 | |||||
| Accounts receivable, net | 5,958,086 | 7,669,625 | |||||||
| inventory, net | 3,330,773 | 3,106,600 | |||||||
| Prepaid expenses and other current | 1,107,155 | 710,558 | |||||||
| Total current assets | 19,335,141 | 18,703,363 | |||||||
| Property and equipment, net | 2,816,674 | 3,204,670 | |||||||
| Intangible assets, net | 539,563 | 664,418 | |||||||
| Other assets | 228,043 | 303,210 | |||||||
| Total long term assets | 3,584,280 | 4,172,298 | |||||||
| Total assets | $ | 22,919,421 | $ | 22,875,661 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities | |||||||||
| Current portion of long term debt | $ | 1,625,000 | $ | 1,195,784 | |||||
| Current portion of capital leases | 50,949 | 2,194 | |||||||
| Line of credit | - | 2,500,000 | |||||||
| Accounts payable | 1,656,602 | 2,008,183 | |||||||
| Accrued liabilities | 3,612,193 | 3,549,604 | |||||||
| Deferred credits | 1,462,603 | 1,392,602 | |||||||
| Total current liabilities | 8,407,347 | 10,648,367 | |||||||
| Long term liabilities | |||||||||
| Long term debt obligations | 3,625,000 | 2,611,609 | |||||||
| Long term capital lease obligations | 183,008 | - | |||||||
| Total long term liabilities | 3,808,008 | 2,611,609 | |||||||
| Total liabilities | 12,215,355 | 13,259,976 | |||||||
| Commitments and Contingencies | - | - | |||||||
| Stockholders equity | |||||||||
| Preferred stock | 1,322 | 1,322 | |||||||
| Common stock | 13,969 | 13,526 | |||||||
| Additional paid in capital | 59,289,516 | 56,681,756 | |||||||
| Accumulated deficit | (48,600,741 | ) | (47,080,919 | ) | |||||
| Total stockholders' equity | 10,704,066 | 9,615,685 | |||||||
| Total liabilities and stockholders equity | $ | 22,919,421 | $ | 22,875,661 | |||||
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Luna Innovations Incorporated |
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Condensed Consolidated Statements of Cash Flows |
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Year ended December 31, |
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2011 |
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| Cash provided by/ (used in) operating activities | |||||||||
| Net loss | $ | (1,392,360 | ) | $ | (2,620,030 | ) | |||
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Adjustments to reconcile net loss to cash provided by (used in) operating activities |
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| Depreciation and amortization | 1,462,511 | 1,331,809 | |||||||
| Share based compensation | 2,163,290 | 3,472,330 | |||||||
| Bad debt expense | |||||||||
| Changes in operating assets and liabilities | |||||||||
| Accounts receivable | 1,711,539 | (466,422 | ) | ||||||
| Inventory | (224,173 | ) | (261,972 | ) | |||||
| Other assets | (321,430 | ) | 669,759 | ||||||
| Accounts payable and accrued expenses | (288,989 | ) | 7,091,386 | ||||||
| Accrued litigation settlement | - | (9,669,728 | ) | ||||||
| Deferred credits | (119,999 | ) | 365,586 | ||||||
| Net cash provided by (used in) operating activities | 2,990,389 | (87,282 | ) | ||||||
| Cash used in investing activities | |||||||||
| Acquisition of property and equipment | (327,704 | ) | (85,149 | ) | |||||
| Intangible property costs | (347,813 | ) | (365,533 | ) | |||||
| Net cash used in investing activities | (675,517 | ) | (450,682 | ) | |||||
| Cash (used in)/ provided by financing activities | |||||||||
| Proceeds from debt obligations | 6,000,000 | 2,500,000 | |||||||
| Payments on debt obligations | (6,867,393 | ) | (834,119 | ) | |||||
| Payment on capital lease obligations | (42,383 | ) | (5,316 | ) | |||||
| Proceeds from exercise of options and warrants | 317,451 | 865,177 | |||||||
| Net cash (used in)/ provided by financing activities | (592,325 | ) | 2,525,742 | ||||||
| Net change in cash | 1,722,547 | 1,987,778 | |||||||
| Cash at beginning of period | 7,216,580 | 5,228,802 | |||||||
| Cash at end of period | $ | 8,939,127 | $ | 7,216,580 | |||||
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Luna Innovations, Incorporated |
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Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA |
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Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA: |
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| Net loss | $ | (353,338 | ) | $ | (382,341 | ) | $ | (1,392,360 | ) | $ | (2,620,030 | ) | |||||
| Interest | 85,891 | 122,163 | 376,524 | 474,408 | |||||||||||||
| Taxes | - | - | 10,307 | - | |||||||||||||
| Depreciation and amortization | 419,811 | 378,172 | 1,462,511 | 1,331,809 | |||||||||||||
| EBITDA | 152,364 | 117,994 | 456,982 | (813,813 | ) | ||||||||||||
| Share based compensation | 426,018 | 832,306 | 2,163,290 | 3,472,330 | |||||||||||||
| Reorganization costs | - | 12,490 | - | 174,292 | |||||||||||||
| Adjusted EBITDA | $ | 578,382 | $ | 962,790 | $ | 2,620,272 | $ | 2,832,809 | |||||||||
Luna Innovations Incorporated
Dale Messick, CFO, 1-540-769-8400
[email protected]