Luna Innovations Reports Third Quarter 2009 Financial Results
Revenues Decrease by $1.8 Million Compared to Third Quarter 2008; Operating Costs Continue to Improve; Net Loss at $2 Million
ROANOKE, Va.--Nov. 12, 2009--Luna Innovations Incorporated (NASDAQ:LUNA), a company focusing on sensing & instrumentation and pharmaceutical nanomedicines, today announced its financial results for the quarter endedSeptember 30, 2009.
As compared to the same quarter last year, third quarter 2009 revenues decreased from$10.7 million to $8.9 million, gross profit decreased from$4.3 million to $3.5 million, and loss per share increased from$0.04 to $0.18.
Kent Murphy, Chairman and Chief Executive Officer, provided this comment related to third quarter results: “In the third quarter, we recognized approximately$0.9 millionof reorganization costs in addition to approximately$0.7 millionof legal fees related to our litigation withHansen Medical. Excluding these costs and fees in both periods, our operating expenses for the most recent quarter would have decreased by approximately$1.0 millioncompared to the same period last year, and our operating loss would have been an improvement compared to the third quarter of last year. When we normalize our results by excluding the costs associated with our reorganization and the Hansen litigation, our Adjusted EBITDA of$0.8 millionrepresents an increase of$0.2 millionover the third quarter of 2008 and our Adjusted EBITDA of$1.3 millionyear to date reflects an increase of$1.1 millioncompared to last year. I am pleased with our continued improvement in the financial results of our core operations and our progress in developing and launching new products.”
Third Quarter Financial Highlights
- Total revenues for the third quarter of 2009 decreased by$1.8 millionto$8.9compared to$10.7 millionduring the third quarter of 2008.
- Product and license revenues decreased$1.2 millionto approximately$2.3 millionin the third quarter of 2009 compared to$3.5 millionin the third quarter of 2008.
- Technology Development Division revenues decreased by$0.7 millionto approximately$6.5 millioncompared to$7.2 millionin the third quarter of 2008. Backlog was approximately$25.7 millionatSeptember 30, 2009and atSeptember 30, 2008.
- Gross profit for the third quarter of 2009 decreased to$3.5 millionfrom$4.3 millionfor the corresponding period of 2008.
- Operating expenses remained approximately flat at$5.4 millionin the third quarter. Legal fees and reorganization expenses were approximately$1.6 millionduring the third quarter of 2009.
- Net loss per share for the third quarter of 2009 was$0.18per share, an increase from a loss per share of$0.04for the third quarter of 2008. Net loss in 2008 included a one-time benefit of$0.7 millionin net gain recognized on a litigation settlement.
- Cash and cash equivalents decreased to$5.7 millionatSeptember 30, 2009, compared to$12.1 millionat the end of last quarter. During the quarter, the company repaid the outstanding balance on its bank debt facility in the amount of$4.3 million.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) excluding the costs for reorganization and the Hansen litigation are$0.8 millioncompared to$0.6 millionin the third quarter of 2008 and$1.3 millionyear to date compared to$0.2 millionfor the first nine months of 2008.
Third Quarter Business Highlights
- Booked approximately$3.4 millionin technology development contracts in the third quarter, including a award from theNational Institutesof Health’sNational Institute of Environmental Health Sciencesto examine the effects of Luna’s fullerene derivatives on the allergic response.
- Launched new product in the Optical Vector Analyzer™ platform, the OVA 5000, an instrument providing complete, rapid, single-scan measurement of all parameters of optical networks in real-time.
Outlook for Remainder of 2009
Given the uncertainties associated with Luna’s Chapter 11 reorganization and the Hansen litigation, the company is unable to provide a reasonable projection for its expected results of operations for the remainder of 2009 at this time.
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 for the third quarter of 2009. The call can be accessed by dialing 1.866.804.6927 domestically or 1.857.350.1673 internationally prior to the start of the call. The access code is 86243063. 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, http://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) develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. Our 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:
This release includes information that constitutes “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding, but not limited to (i) Luna’s intention to continue to serve its customers’ needs; (ii) improvements in operating efficiencies and expenses; and (iii) the company’s position if it can emerge from Chapter 11 quickly under its filed plan of reorganization. The company attempts, whenever possible, to identify forward-looking statements by words such as “intends,” “will,” “plans,” “anticipates,” “expects,” “may,” “estimates,” “believes,” “should,” “projects,” or “continue,” or the negative of those words and other comparable words. Similarly, statements that describe the company’s business strategy, goals, prospects, opportunities, outlook, objectives, plans or intentions are also forward-looking statements. Actual events or results may differ materially from the expectations expressed in such forward-looking statements as a result of various factors, including risks and uncertainties, many of which are beyond the company’s control. Factors that could cause actual results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to risks inherent in current or future litigation proceedings, particularly with respect to Hansen Medical, Inc.; the company’s inability to continue to operate its business in the normal course; whether the company can emerge from Chapter 11 reorganization in the near future; and difficulties with the application of the company’s technologies. Additional factors that may affect the future results of the company are set forth in the company’s quarterly and annual reports on Form 10-Q and Form 10-K, respectively, and other filings with the Securities and Exchange Commission(“SEC”), which are available at the SEC’s website at http://www.sec.gov , and at the company’s website at http://www.lunainnovations.com. These risk factors are updated from time to time through the filing of periodic reports with theSEC. The statements made in this press 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 herein after the date of this press release.
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Luna Innovations Incorporated Consolidated Statements of Operations |
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenues: | ||||||||||||||||
| Technology development | $ | 6,538,041 | $ | 7,246,674 | $ | 19,867,384 | $ | 20,795,697 | ||||||||
| Product and license | 2,336,884 | 3,456,872 | 6,162,875 | 8,706,075 | ||||||||||||
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Total |
8,874,925 | 10,703,546 | 26,030,259 | 29,501,772 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Technology development | 4,179,518 | 4,983,336 | 13,348,527 | 13,558,984 | ||||||||||||
| Product and license | 1,188,706 | 1,453,467 | 3,115,556 | 4,222,699 | ||||||||||||
| Total | 5,368,224 | 6,436,803 | 16,464,083 | 17,781,683 | ||||||||||||
| Gross profit | 3,506,701 | 4,266,743 | 9,566,176 | 11,720,089 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Selling, general, and administrative | 3,892,238 | 4,330,358 | 13,033,818 | 13,727,316 | ||||||||||||
| Research, development, and engineering | 660,836 | 1,041,172 | 2,343,176 | 2,738,983 | ||||||||||||
| Litigation reserve | - | - | 36,303,643 | - | ||||||||||||
| Impairment of intangible assets | - | - | 1,310,598 | - | ||||||||||||
| Reorganization costs | 872,644 | - | 872,644 | - | ||||||||||||
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Total |
5,425,718 | 5,371,530 | 53,863,879 | 16,466,299 | ||||||||||||
| Operating loss | (1,919,017 | ) | (1,104,787 | ) | (44,297,703 | ) | (4,746,210 | ) | ||||||||
| Other income/(expense) | ||||||||||||||||
| Interest expense, net | (124,208 | ) | (36,323 | ) | (422,702 | ) | (45,345 | ) | ||||||||
| Other | - | 667,125 | (18,167 | ) | 667,125 | |||||||||||
| Total | (124,208 | ) | 630,802 | (440,869 | ) | 621,780 | ||||||||||
| Loss before income taxes | (2,043,225 | ) | (473,985 | ) | (44,738,572 | ) | (4,124,430 | ) | ||||||||
| Income tax expense | - | - | 600,000 | - | ||||||||||||
| Net loss | $ | (2,043,225 | ) | $ | (473,985 | ) | $ | (45,338,572 | ) | $ | (4,124,430 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.18 | ) | $ | (0.04 | ) | $ | (4.05 | ) | $ | (0.38 | ) | ||||
| Weighted average shares outstanding | 11,247,749 | 11,055,613 | 11,205,575 | 10,924,596 | ||||||||||||
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Luna Innovations Incorporated Consolidated Balance Sheets |
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| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Assets | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 5,653,856 | $ | 15,518,960 | ||||
| Accounts receivable, net | 7,595,653 | 7,332,034 | ||||||
| Refundable income taxes | 98,092 | 98,092 | ||||||
| Inventory | 2,844,485 | 2,828,991 | ||||||
| Other current assets | 871,410 | 342,598 | ||||||
| Total current assets | 17,063,496 | 26,120,675 | ||||||
| Property and equipment, net | 4,408,594 | 5,363,957 | ||||||
| Intangible assets, net | 155,503 | 1,813,643 | ||||||
| Deferred tax asset | - | 600,000 | ||||||
| Other assets | 790,468 | 118,292 | ||||||
| Total assets | $ | 22,418,061 | $ | 34,016,567 | ||||
| Liabilities and stockholders' equity | ||||||||
| Liabilities not subject to compromise | ||||||||
| Current portion of long term debt | $ | - | $ | 1,428,572 | ||||
| Current portion of capital lease obligation | 9,469 | 17,396 | ||||||
| Accounts payable | 330,179 | 2,667,192 | ||||||
| Accrued liabilities | 2,212,131 | 5,161,308 | ||||||
| Deferred credits | 1,751,891 | 1,854,282 | ||||||
| Total liabilities not subject to compromise | 4,303,670 | 11,128,750 | ||||||
| Liabilities subject to compromise | 46,722,047 | - | ||||||
| Long term debt | - | 8,571,428 | ||||||
| Total liabilities | 51,025,717 | 19,700,178 | ||||||
| Stockholders' equity | ||||||||
| Common stock | 11,266 | 11,138 | ||||||
| Additional paid-in capital | 40,375,326 | 37,960,928 | ||||||
| Accumulated deficit | (68,994,248 | ) | (23,655,677 | ) | ||||
| Total stockholders' equity | (28,607,656 | ) | 14,316,389 | |||||
| Total liabilities and stockholders' equity | 22,418,061 | 34,016,567 | ||||||
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Luna Innovations Incorporated Consolidated Statements of Cash Flows |
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| Nine months ended | ||||||||
| September 30, | ||||||||
| 2009 | 2008 | |||||||
| (unaudited) | (unaudited) | |||||||
| Cash used in operating activities | ||||||||
| Net loss | $ | (45,338,572 | ) | $ | (4,124,430 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities |
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| Depreciation and amortization | 1,504,211 | 1,425,857 | ||||||
| Impairment of intangible assets | 1,310,598 | - | ||||||
| Share-based compensation | 2,378,968 | 2,163,467 | ||||||
| Deferred tax expense | 600,000 | - | ||||||
| Reorganization expense in excess of cash payments | 88,210 | - | ||||||
| Change in assets and liabilities | ||||||||
| Accounts receivable | (263,620 | ) | (698,641 | ) | ||||
| Refundable income taxes | - | 5,401 | ||||||
| Inventory | (1,181,901 | ) | (1,029,786 | ) | ||||
| Other assets | (34,581 | ) | (258,906 | ) | ||||
| Accounts payable and accrued expenses | 44,008 | 1,493,982 | ||||||
| Litigation reserve | 36,303,643 | - | ||||||
| Deferred credits | (102,391 | ) | (294,499 | ) | ||||
| Net cash used in operating activities | (4,691,427 | ) | (1,317,555 | ) | ||||
| Cash used in investing activities | ||||||||
| Acquisition of property and equipment | (49,295 | ) | (318,436 | ) | ||||
| Intangible property costs | (152,011 | ) | (378,780 | ) | ||||
| Net cash used in investing activities | (201,306 | ) | (697,216 | ) | ||||
| Cash from (used in) financing activities | ||||||||
| Payments on capital lease obligations | (7,927 | ) | (7,098 | ) | ||||
| Proceeds from (payment of) debt obligations | (5,000,000 | ) | 5,000,000 | |||||
| Proceeds from exercise of options | 35,556 | 156,189 | ||||||
| Net cash from (used in) financing activities | (4,972,371 | ) | 5,149,091 | |||||
| Net change in cash | (9,865,104 | ) | 3,134,320 | |||||
| Cash and cash equivalents, beginning of period | 15,518,960 | 12,046,945 | ||||||
| Cash and cash equivalents, end of period | $ | 5,653,856 | $ | 15,181,265 | ||||
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Luna Innovations Incorporated Reconciliation of EBITDA and Adjusted EBITDA to Net Loss |
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| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net loss | $ | (2,043,225 | ) | $ | (473,985 | ) | $ | (45,338,572 | ) | $ | (4,124,430 | ) | ||||
| Interest | 124,208 | 36,323 | 422,702 | 45,345 | ||||||||||||
| Taxes | - | - | 600,000 | - | ||||||||||||
| Depreciation and amortization | 361,365 | 466,904 | 1,504,211 | 1,425,857 | ||||||||||||
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EBITDA |
(1,557,652 | ) | 29,242 | (42,811,659 | ) | (2,653,228 | ) | |||||||||
| Share-based compensation | 809,925 | 740,565 | 2,378,968 | 2,163,467 | ||||||||||||
| Litigation reserve | - | - | 36,303,643 | - | ||||||||||||
| Litigation settlement | - | (667,125 | ) | - | (667,125 | ) | ||||||||||
| Impairment of intangible assets | - | - | 1,310,598 | - | ||||||||||||
| Adjusted EBITDA | (747,727 | ) | 102,682 | (2,818,450 | ) | (1,156,886 | ) | |||||||||
| Costs of reorganization and Hansen litigation | 1,556,952 | 509,244 | 4,155,008 | 1,360,089 | ||||||||||||
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Adjusted EBITDA excluding reorganization and Hansen litigation |
$ | 809,225 | $ | 611,926 | $ | 1,336,558 | $ | 203,203 | ||||||||
Luna Innovations Incorporated
Investor Contact:
Dale Messick, CFO
1-540-769-8400
[email protected]
or
Media Contact:
Karin Clark
1-540-769-8400
[email protected]