[March 13, 2014] |
|
Luna Innovations Incorporated Reports Fourth Quarter and Full Year 2013 Financial Results
ROANOKE, Va. --(Business Wire)--
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the fourth quarter and year ended December 31,
2013.
As compared to the same quarter last year, total revenue decreased by
4%, from $6.1 million in the fourth quarter of 2012 to $5.9 million in
the fourth quarter of 2013. Total revenue improved by 2% compared to the
third quarter of 2013. Products and licensing revenue increased 18%
compared to the fourth quarter of 2012 and also increased 16% compared
to the third quarter of 2013. Technology development revenue decreased
by 21% compared to the fourth quarter of 2012, due primarily to the
continued lower level of contract research projects within the company's
optical systems group. Gross profit remained essentially flat at $2.0
million for the fourth quarter of 2012 and for the fourth quarter of
2013. Operating expenses for the fourth quarter of 2013 increased by
$1.1 million, or 35%, from the fourth quarter of 2012 primarily due to
incremental expenses incurred in connection with the company's sale of
its fiber optic shape sensing business to Intuitive Surgical, Inc.,
which was completed in January 2014.
The company reported a loss from continuing operations before income
taxes of $2.0 million for the fourth quarter of 2013, compared to a loss
from continuing operations before income taxes of $1.1 million in the
fourth quarter of 2012, with the increase being primarily driven by the
incremental transaction related costs recognized in the fourth quarter
of 2013. Income from discontinued operations, representing the results
attributable to the operations of its secure computing and
communications group, which was sold in March 2013, decreased from
income of $0.5 million for the fourth quarter of 2012 to a loss of $0.3
million for the fourth quarter of 2013. The company reported a net loss
attributable to common stockholders for the fourth quarter of 2013 of
$2.0 million, or $0.14 per diluted common share, compared to a net loss
attributable to common stockholders of $0.6 million, or $0.04 per
diluted common share for the fourth 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, decreased to $(1.4) million for the fourth quarter of
2013, as compared to $(0.3) million for the fourth quarter of 2012.
For the year ended December 31, 2013, total revenue decreased 16% to
$22.0 million for 2013 compared to $26.4 million for the year ended
December 31, 2012. The decrease in total revenue was driven primarily by
a 24% decrease in technology development revenue attributable to the
decreased level of contract research activity in the company's optical
systems group throughout 2013. Products and licensing revenue decreased
6% compared to 2012 due to the sale of prototype shape sensing devices
in 2012 that did not recur in 2013. Operating expenses in 2013 increased
6% over 2012 levels due to the transaction related expenses recognized
in the fourth quarter of 2013, as noted above. Net loss attributable to
common stockholders for the year ended December 31, 2013 was $0.8
million, or $0.06 per diluted common share, compared to a net loss of
$1.5 million, or $0.11 per diluted common share for the year ended
December 31, 2012.
"With the successful completion of the sale transactions related to our
secure computing and communications group in the first quarter of 2013
and our fiber optic shape sensing technology in the first quarter of
2014, we have narrowed the company's focus to concentrate on our key
initiative surrounding fiber optic sensing solutions for future growth,"
said My Chung, chief executive officer of Luna. "With this narrowed
focus and the improved liquidity we have realized as a result of the
secure computing and shape sensing transactions, we are well positioned
to capitalize on the growth potential of the fiber optic sensing market."
Fourth Quarter Financial and Business Summary
-
Total revenue decreased by 4%, from $6.1 million in the fourth quarter
of 2012 to $5.9 million in the fourth quarter of 2013.
-
Technology development revenue decreased by 21%, to $2.9 million, for
the fourth quarter of 2013, from $3.6 million for the fourth quarter
of 2012.
-
Products and licensing revenue increased by 18%, from $2.5 million in
the fourth quarter of 2012 to $3.0 million in the fourth quarter of
2013.
-
Gross profit for the fourth quarter of 2013 was $2.0 million, or 34%
of total revenue, consistent with gross profit of $2.0 million, or 33%
of total revenue, for the fourth quarter of 2012.
-
Selling, general and administrative expenses increased by 40% to $3.5
million, or 60% of total revenue, for the fourth quarter of 2013, from
$2.5 million, or 41% of total revenue, for the fourth quarter of 2012.
SG&A expenses for the fourth quarter of 2013 were adversely impacted
by incremental costs recognized in connection with the company's sale
of its fiber optic shape sensing technology, which was completed in
January 2014.
-
Total operating expenses increased to $4.2 million, or 71% of total
revenue, for the fourth quarter of 2013 from $3.1 million, or 50% of
total revenue for the fourth quarter of 2012.
-
Net loss attributable to common stockholders increased to $2.0 million
for the fourth quarter of 2013 from $0.6 million for the fourth
quarter of 2012.
-
Cash and cash equivalents totaled $7.8 million at December 31, 2013,
as compared to $6.3 million at December 31, 2012 and $8.2 million at
September 30, 2013.
Year Ended December 31, 2013 Financial Summary
-
Total revenue decreased by 16% to $22.0 million for the year ended
December 31, 2013 compared to $26.4 million for the year ended
December 31, 2012.
-
Technology development revenue decreased by 24%, from $15.1 million
for the year ended December 31, 2012 to $11.4 million for the year
ended December 31, 2013.
-
Products and licensing revenue decreased by 6%, from $11.3 million for
the year ended December 31, 2012 to $10.6 million for the year ended
December 31, 2013.
-
Gross profit for the year ended December 31, 2013 decreased by 23%, to
$8.0 million, compared to a gross profit of $10.4 million for the year
ended December 31, 2012. Gross margin percentages decreased to 36% of
revenue for the year ended December 31, 2013 from 39% of revenue for
the year ended December 31, 2012.
-
Selling, general and administrative expenses increased 6% to $10.9
million, or 49% of total revenue for the year ended December 31, 2013,
compared to $10.3 million, or 39% of total revenue for the year ended
December 31, 2012.
-
Total operating expenses increased to $13.6 million, or 62% of total
revenue, for the year ended December 31, 2013, from $12.8 million, or
48% of total revenue, for the year ended December 31, 2012.
-
Net loss attributable to common stockholders improved to $0.8 million
for the year ended December 31, 2013, compared to a net loss
attributable to common stockholders of $1.5 million for the year ended
December 31, 2012, largely resulting from a net after-tax gain of $3.3
million realized on the sale of the company's secure computing and
communications group for the year ended December 31, 2013.
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. (EDT) today to discuss its financial results and business
developments for the fourth quarter of 2013. The call can be accessed by
dialing 877-299-4454 domestically or 617-597-5447 internationally prior
to the start of the call. The participant access code is 64228428.
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 public company composed of scientists, engineers, and business
professionals developing and manufacturing a new generation of
technologies and products. Luna has been successful in taking innovative
technologies from applied research to product development and ultimately
to the commercial market, driving breakthroughs in fields such as
aerospace, automotive, telecommunications, healthcare, energy, and
defense.
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 company's future growth and commercialization of the
company's shape sensing platform. 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 (News - Alert) 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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|
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Luna Innovations Incorporated
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
Year ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
(unaudited)
|
Revenue:
|
|
|
|
|
|
|
|
|
Technology development revenue
|
|
$
|
2,857,124
|
|
|
$
|
3,598,133
|
|
|
$
|
11,421,868
|
|
|
$
|
15,126,834
|
|
Products and licensing revenue
|
|
3,001,147
|
|
|
2,535,087
|
|
|
10,624,350
|
|
|
11,250,717
|
|
Total revenue
|
|
5,858,271
|
|
|
6,133,220
|
|
|
22,046,218
|
|
|
26,377,551
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Technology development costs
|
|
2,218,877
|
|
|
2,674,741
|
|
|
8,882,071
|
|
|
10,749,335
|
|
Products and licensing costs
|
|
1,666,437
|
|
|
1,420,063
|
|
|
5,182,633
|
|
|
5,242,043
|
|
Total cost of revenue
|
|
3,885,314
|
|
|
4,094,804
|
|
|
14,064,704
|
|
|
15,991,378
|
|
Gross Profit
|
|
1,972,957
|
|
|
2,038,416
|
|
|
7,981,514
|
|
|
10,386,173
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
3,508,150
|
|
|
2,498,081
|
|
|
10,896,985
|
|
|
10,275,287
|
|
Research, development and engineering
|
|
655,892
|
|
|
589,540
|
|
|
2,721,229
|
|
|
2,512,840
|
|
Total operating expense
|
|
4,164,042
|
|
|
3,087,621
|
|
|
13,618,214
|
|
|
12,788,127
|
|
Operating loss
|
|
(2,191,085
|
)
|
|
(1,049,205
|
)
|
|
(5,636,700
|
)
|
|
(2,401,954
|
)
|
Other income/(expense):
|
|
|
|
|
|
|
|
|
Other income, net
|
|
261,773
|
|
|
22,498
|
|
|
347,062
|
|
|
108,061
|
|
Interest expense
|
|
(38,419
|
)
|
|
(64,056
|
)
|
|
(189,151
|
)
|
|
(286,529
|
)
|
Total other income/(expense)
|
|
223,354
|
|
|
(41,558
|
)
|
|
157,911
|
|
|
(178,468
|
)
|
Loss from continuing operations before income taxes
|
|
(1,967,731
|
)
|
|
(1,090,763
|
)
|
|
(5,478,789
|
)
|
|
(2,580,422
|
)
|
Income tax (benefit)/expense
|
|
(365,798
|
)
|
|
-
|
|
|
(1,453,637
|
)
|
|
21,417
|
|
Loss from continuing operations
|
|
(1,601,933
|
)
|
|
(1,090,763
|
)
|
|
(4,025,152
|
)
|
|
(2,601,839
|
)
|
(Loss)/income from discontinued operations, net of income taxes
|
|
(328,643
|
)
|
|
503,375
|
|
|
3,314,179
|
|
|
1,217,454
|
|
Net loss
|
|
(1,930,576
|
)
|
|
(587,388
|
)
|
|
(710,973
|
)
|
|
(1,384,385
|
)
|
Preferred stock dividend
|
|
26,166
|
|
|
24,780
|
|
|
102,327
|
|
|
119,754
|
|
Net loss attributable to common stockholders
|
|
$
|
(1,956,742
|
)
|
|
$
|
(612,168
|
)
|
|
$
|
(813,300
|
)
|
|
$
|
(1,504,139
|
)
|
Net loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
Diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
Net (loss)/income per share from discontinued operations:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
0.23
|
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
(0.02
|
)
|
|
$
|
0.03
|
|
|
$
|
0.20
|
|
|
$
|
0.07
|
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.14
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
Diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
Weighted average common shares and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
14,485,882
|
|
|
14,008,772
|
|
|
14,336,135
|
|
|
13,930,267
|
|
Diluted
|
|
14,485,882
|
|
|
16,454,125
|
|
|
16,621,927
|
|
|
16,312,048
|
|
|
|
|
|
|
|
|
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|
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Luna Innovations Incorporated
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Condensed Consolidated Balance Sheets
|
|
|
|
|
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Year ended December 31,
|
|
|
2013
|
|
2012
|
Assets
|
|
Unaudited
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,778,541
|
|
|
$
|
6,340,461
|
|
Accounts receivable, net
|
|
5,408,281
|
|
|
7,059,635
|
|
Inventory, net
|
|
3,346,177
|
|
|
3,336,916
|
|
Prepaid expenses
|
|
708,974
|
|
|
667,773
|
|
Other current assets
|
|
70,208
|
|
|
35,629
|
|
Total current assets
|
|
17,312,181
|
|
|
17,440,414
|
|
Property and equipment, net
|
|
2,060,709
|
|
|
2,426,638
|
|
Intangible assets, net
|
|
288,475
|
|
|
437,839
|
|
Other assets
|
|
42,710
|
|
|
152,877
|
|
Total assets
|
|
$
|
19,704,075
|
|
|
$
|
20,457,768
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Current portion of long term debt obligation
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
Current portion of capital lease obligation
|
|
66,617
|
|
|
54,091
|
|
Accounts payable
|
|
1,401,764
|
|
|
1,797,571
|
|
Accrued liabilities
|
|
3,454,418
|
|
|
2,747,175
|
|
Deferred credits
|
|
691,424
|
|
|
832,822
|
|
Total current liabilities
|
|
7,114,223
|
|
|
6,931,659
|
|
Long-term debt obligation
|
|
625,000
|
|
|
2,125,000
|
|
Long-term lease obligation
|
|
110,307
|
|
|
128,917
|
|
Total liabilities
|
|
7,849,530
|
|
|
9,185,576
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, par value $0.001, 1,321,514 shares authorized,
issued and outstanding at December 31, 2013 and 2012, respectively
|
|
1,322
|
|
|
1,322
|
|
Common stock, par value $0.001, 100,000,000 shares authorized,
14,527,335 and 14,009,280 shares issued and outstanding at December
31, 2013 and 2012, respectively
|
|
14,842
|
|
|
14,245
|
|
Additional paid-in capital
|
|
62,756,571
|
|
|
61,361,505
|
|
Accumulated deficit
|
|
(50,918,190
|
)
|
|
(50,104,880
|
)
|
Total stockholders' equity
|
|
11,854,545
|
|
|
11,272,192
|
|
Total liabilities and stockholders' equity
|
|
$
|
19,704,075
|
|
|
$
|
20,457,768
|
|
|
|
|
|
|
|
|
|
|
|
|
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Luna Innovations Incorporated
|
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
Year ended December 31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
Cash flows used in operating activities
|
|
|
|
|
Net loss
|
|
$
|
(710,973
|
)
|
|
$
|
(1,384,385
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
Depreciation and amortization
|
|
935,477
|
|
|
1,092,027
|
|
Share-based compensation
|
|
1,166,379
|
|
|
1,862,533
|
|
Gain on sale of discontinued operations, net of income taxes
|
|
(3,391,451
|
)
|
|
-
|
|
Allowance for doubtful accounts
|
|
134,811
|
|
|
-
|
|
Tax benefit from utilization of net operating loss carryforward
|
|
(1,507,791
|
)
|
|
-
|
|
Change in assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
1,533,827
|
|
|
(1,101,549
|
)
|
Inventory
|
|
(9,261
|
)
|
|
(10,482
|
)
|
Other assets
|
|
(79,180
|
)
|
|
478,919
|
|
Accounts payable and accrued expenses
|
|
304,175
|
|
|
(724,050
|
)
|
Deferred credits
|
|
(178,305
|
)
|
|
(629,781
|
)
|
Net cash used in operating activities
|
|
(1,802,292
|
)
|
|
(416,768
|
)
|
Cash flows provided by/(used in) investing activities
|
|
|
|
|
Acquisition of property and equipment
|
|
(186,956
|
)
|
|
(371,390
|
)
|
Intangible property costs
|
|
(253,451
|
)
|
|
(224,537
|
)
|
Proceeds from sale of discontinued operations, net of fees
|
|
5,110,855
|
|
|
-
|
|
Net cash provided by/(used in) investing activities
|
|
4,670,448
|
|
|
(595,927
|
)
|
Cash flows used in financing activities
|
|
|
|
|
Payments on debt obligations
|
|
(1,500,000
|
)
|
|
(1,625,000
|
)
|
Payment on capital lease obligations
|
|
(57,033
|
)
|
|
(50,949
|
)
|
Proceeds from the exercise of options and warrants
|
|
126,957
|
|
|
89,978
|
|
Net cash used in financing activities
|
|
(1,430,076
|
)
|
|
(1,585,971
|
)
|
Net increase/(decrease) in cash or cash equivalents
|
|
1,438,080
|
|
|
(2,598,666
|
)
|
Cash and cash equivalents-beginning of period
|
|
6,340,461
|
|
|
8,939,127
|
|
Cash and cash equivalents-end of period
|
|
$
|
7,778,541
|
|
|
$
|
6,340,461
|
|
|
|
|
|
|
|
|
|
|
|
Luna Innovations Incorporated
|
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted EBITDA
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
Year ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
(unaudited)
|
Net loss
|
|
$
|
(1,930,576
|
)
|
|
$
|
(587,388
|
)
|
|
$
|
(710,973
|
)
|
|
$
|
(1,384,385
|
)
|
Less (loss)/income from discontinued operations, net of income taxes
|
|
(328,643
|
)
|
|
503,375
|
|
|
3,314,179
|
|
|
1,217,454
|
|
Loss from continuing operations
|
|
(1,601,933
|
)
|
|
(1,090,763
|
)
|
|
(4,025,152
|
)
|
|
(2,601,839
|
)
|
Interest expense
|
|
38,419
|
|
|
64,056
|
|
|
189,151
|
|
|
286,529
|
|
Tax (benefit)/expense
|
|
(365,798
|
)
|
|
-
|
|
|
(1,453,637
|
)
|
|
21,417
|
|
Depreciation and amortization
|
|
224,102
|
|
|
277,529
|
|
|
935,477
|
|
|
1,092,027
|
|
EBITDA
|
|
(1,705,210
|
)
|
|
(749,178
|
)
|
|
(4,354,161
|
)
|
|
(1,201,866
|
)
|
Share-based compensation
|
|
269,825
|
|
|
450,861
|
|
|
1,166,379
|
|
|
1,862,533
|
|
Warrant expense
|
|
-
|
|
|
(35,696
|
)
|
|
-
|
|
|
17,190
|
|
Adjusted EBITDA
|
|
$
|
(1,435,385
|
)
|
|
$
|
(334,013
|
)
|
|
$
|
(3,187,782
|
)
|
|
$
|
677,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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