Adjusted EBITDA of $0.4 million and net loss of $(0.8) million, for
the third quarter of 2015, Luna's first full quarter results following
its merger with Advanced Photonix, Inc.
Luna Innovations Incorporated (NASDAQ: LUNA) today announced its
financial results for the three months and nine months ended
September 30, 2015, the company's first full quarter of operating
results following its merger with Advanced Photonix, Inc. ("API").
The company's adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") was $0.4 million for the three months
ended September 30, 2015 compared to an Adjusted EBITDA loss of $(0.3)
million for the three months ended September 30, 2014. Net loss
attributable to common stockholders was $(0.8) million for each of the
three months ended September 30, 2015 and September 30, 2014. For the
nine months ended September 30, 2015, Adjusted EBITDA was $0.6 million
compared to an Adjusted EBITDA loss of $(2.3) million for the first nine
months of 2014. Net loss attributable to common stockholders for the
nine months ended September 30, 2015 was $(5.7) million compared to net
income attributable to common stockholders of $6.8 million for the first
nine months of 2014.
“We are excited to again be reporting positive Adjusted EBITDA following
our merger with API as we continue to realize the synergies of combining
these two companies,” said My Chung, president and chief executive
officer of Luna. "In the third quarter, the Picometrix brand of products
returned to the higher revenue levels that API experienced in mid-2014,
with the deployment of new fiber optic networks, including 100G networks
in Asia and North America, creating increased demand for our high speed
optical receiver and detector products."
Third Quarter Financial Summary
Total revenues for the three months ended September 30, 2015 were $13.2
million, compared to $5.4 million for the same period of 2014. Total
revenues of $13.2 million included $7.8 million of revenue from the
operations of API for the third quarter of 2015. Product and licensing
revenue grew to $9.9 million for the three months ended September 30,
2015, compared to $2.3 million for the three months ended September 30,
2014. Product and licensing revenue for the third quarter of 2015
included $7.4 million attributable to the operations of API. Revenues
from sales of legacy Luna fiber optic test & measurement equipment
increased 12% for the three months ended September 30, 2015 compared to
the three months ended September 30, 2014.
With the inclusion of API operating results in the third quarter of
2015, gross profit increased to $5.0 million, or 38% of total revenues,
for the three months ended September 30, 2015, compared to gross profit
of $2.1 million, or 39% of total revenues, for the three months ended
September 30, 2014.
Selling, general and administrative expenses increased to $4.2 million
for the three months ended September 30, 2015, compared to $2.3 million
for the three months ended September 30, 2014. Selling, general and
administrative expenses for the three months ended September 30, 2015
included $1.5 million associated with the acquired operations of API.
Incremental depreciation and amortization expense related to the step-up
in bases of the API assets acquired was $0.4 million.
Research, development and engineering expenses increased to $1.5 million
for the third quarter of 2015 compared to $0.5 million for the third
quarter of 2014. Research, development and engineering expenses included
$1.0 million of costs from the operations of API for the three months
ended September 30, 2015.
Operating loss was $(0.7) million for each of the three months ended
September 30, 2015 and September 30, 2014. The operating loss for the
three months ended September 30, 2015 included $0.1 million of
transaction-related expenses associated with Luna's merger with API and
$0.4 million of incremental depreciation and amortization expense
related to the step-up in bases of the acquired API assets. Excluding
the impact of these transaction costs and purchase accounting
amortization, operating loss would have improved to $(0.2) million for
the three months ended September 30, 2015.
Year to Date Financial Summary
For the nine months ended September 30, 2015, total revenues were $28.6
million compared to $15.1 million for the nine months ended September
30, 2014. Total revenues for the nine months ended September 30, 2015
included $11.8 million of revenues from API during the period from the
closing of the merger with API on May 8, 2015 through September 30,
2015. Revenues from Luna's legacy business grew $1.7 million, or 11%,
for the first nine months of 2015 compared to the first nine months of
2014. The increased revenue from Luna's legacy business resulted
primarily from increased sales of the company's ODiSI and Optical
Backscatter Reflectometer products.
Gross profit increased to $11.5 million, or 40% of total revenues, for
the nine months ended September 30, 2015 compared to $5.6 million, or
37% of total revenues, for the first nine months of 2014. The improved
margin is attributable to the greater proportion of product sales within
the total revenue mix as a result of the addition of revenues from API's
business in the company's operating results as well as the continued
growth in sales of the legacy Luna products.
Selling, general and administrative expenses increased to $13.9 million
for the nine months ended September 30, 2015 compared to $7.6 million
for the nine months ended September 30, 2014. Selling, general and
administrative expenses for the first nine months of 2015 included $3.6
million of non-recurring merger- related expenses and $0.8 million of
incremental depreciation and amortization expense related to the step-up
in bases of the API assets acquired. Research, development and
engineering expenses were $3.0 million for the nine months ended
September 30, 2015 compared to $1.7 million for the first nine months of
2014. Research, development and engineering expenses for the nine months
ended September 30, 2015 included $1.4 million of expenses related to
the operations of API for the period from the closing of the merger
through September 30, 2015.
Net loss attributable to common stockholders was $(5.7) million for the
nine months ended September 30, 2015 compared to net income attributable
to common stockholders of $6.8 million for the nine months ended
September 30, 2014. Net income for the nine months ended September 30,
2014 was favorably impacted by an after-tax gain on discontinued
operations of $9.1 million resulting from the sale of the company's
medical shape sensing business in January 2014. Adjusted EBITDA improved
to $0.6 million for the nine months ended September 30, 2015 compared to
an Adjusted EBITDA loss of $(2.3) million for the nine months ended
September 30, 2014.
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 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, including expenses incurred in connection with Luna's merger
with API. 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. (EST) today to discuss its financial results and business
developments for the third quarter of 2015. The call can be accessed by
dialing 855.236.2056 domestically or 267.753.2162 internationally prior
to the start of the call. The participant access code is 3056296.
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)
develops, manufactures and markets fiber optic sensing, test and
measurement products and is focused on bringing new and innovative
technology solutions to measure, monitor, protect and improve critical
processes in the aerospace, automotive, energy, composite,
telecommunications and defense industries. Following its merger with
API, the company also packages optoelectronic semiconductors into high
speed optical receivers (HSOR products), custom optoelectronic
subsystems (Optosolutions products) and Terahertz (THz) instrumentation.
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 the company's
expectations regarding the company’s future financial performance,
continuing synergies following the merger with API, and potential demand
for the company's HSOR and detector products. 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, integration or other operational issues
related to the merger, technological challenges and those risks and
uncertainties set forth in the company’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 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.
|
|
|
|
|
|
|
Luna Innovations Incorporated
|
|
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Technology development
|
|
$
|
3,277,442
|
|
|
$
|
3,067,022
|
|
|
$
|
9,881,228
|
|
|
$
|
8,961,909
|
|
|
Products and licensing
|
|
9,927,788
|
|
|
2,303,508
|
|
|
18,688,852
|
|
|
6,108,799
|
|
|
Total revenues
|
|
13,205,230
|
|
|
5,370,530
|
|
|
28,570,080
|
|
|
15,070,708
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
Technology development
|
|
2,558,987
|
|
|
2,379,105
|
|
|
7,218,757
|
|
|
6,793,061
|
|
|
Products and licensing
|
|
5,667,170
|
|
|
908,175
|
|
|
9,886,557
|
|
|
2,654,305
|
|
|
Total cost of revenues
|
|
8,226,157
|
|
|
3,287,280
|
|
|
17,105,314
|
|
|
9,447,366
|
|
|
Gross Profit
|
|
4,979,073
|
|
|
2,083,250
|
|
|
11,464,766
|
|
|
5,623,342
|
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
4,210,718
|
|
|
2,329,713
|
|
|
13,916,545
|
|
|
7,551,512
|
|
|
Research, development and engineering
|
|
1,491,096
|
|
|
473,527
|
|
|
2,982,451
|
|
|
1,707,190
|
|
|
Total operating expense
|
|
5,701,814
|
|
|
2,803,240
|
|
|
16,898,996
|
|
|
9,258,702
|
|
|
Operating loss
|
|
(722,741
|
)
|
|
(719,990
|
)
|
|
(5,434,230
|
)
|
|
(3,635,360
|
)
|
|
Other income/(expense):
|
|
|
|
|
|
|
|
|
|
Other income/(expense), net
|
|
14,765
|
|
|
—
|
|
|
(7,602
|
)
|
|
111,431
|
|
|
Interest expense
|
|
(77,417
|
)
|
|
(21,275
|
)
|
|
(136,520
|
)
|
|
(80,942
|
)
|
|
Total other income/(expense)
|
|
(62,652
|
)
|
|
(21,275
|
)
|
|
(144,122
|
)
|
|
30,489
|
|
|
Loss from continuing operations, before income taxes
|
|
(785,393
|
)
|
|
(741,265
|
)
|
|
(5,578,352
|
)
|
|
(3,604,871
|
)
|
|
Income tax expense/(benefit)
|
|
16,296
|
|
|
(274,709
|
)
|
|
19,104
|
|
|
(1,419,882
|
)
|
|
Net loss from continuing operations
|
|
(801,689
|
)
|
|
(466,556
|
)
|
|
(5,597,456
|
)
|
|
(2,184,989
|
)
|
|
(Loss)/income from discontinued operations, net of income taxes
|
|
—
|
|
|
(277,614
|
)
|
|
—
|
|
|
9,065,141
|
|
|
Net (loss)/income
|
|
(801,689
|
)
|
|
(744,170
|
)
|
|
(5,597,456
|
)
|
|
6,880,152
|
|
|
Preferred stock dividend
|
|
18,217
|
|
|
26,760
|
|
|
64,798
|
|
|
83,630
|
|
|
Net (loss)/income attributable to common stockholders
|
|
$
|
(819,906
|
)
|
|
$
|
(770,930
|
)
|
|
$
|
(5,662,254
|
)
|
|
$
|
6,796,522
|
|
|
Net loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.15
|
)
|
|
Net (loss)/income per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
—
|
|
|
$
|
0.61
|
|
|
Net (loss)/income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
0.46
|
|
|
Weighted average common shares and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
27,393,392
|
|
|
15,016,429
|
|
|
21,530,315
|
|
|
14,821,619
|
|
|
|
|
|
|
|
|
Luna Innovations Incorporated
|
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,090,036
|
|
|
$
|
14,116,969
|
|
|
Accounts receivable, net
|
|
9,322,295
|
|
|
5,689,615
|
|
|
Inventory
|
|
10,037,202
|
|
|
3,364,233
|
|
|
Prepaid expenses and other current assets
|
|
1,672,120
|
|
|
715,302
|
|
|
Total current assets
|
|
28,121,653
|
|
|
23,886,119
|
|
|
Property and equipment, net
|
|
6,672,507
|
|
|
3,497,057
|
|
|
Intangible assets, net
|
|
11,301,624
|
|
|
199,277
|
|
|
Goodwill
|
|
913,882
|
|
|
—
|
|
|
Other assets
|
|
88,948
|
|
|
1,995
|
|
|
Total assets
|
|
$
|
47,098,614
|
|
|
$
|
27,584,448
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Current portion of long-term debt obligations
|
|
$
|
1,500,000
|
|
|
$
|
625,000
|
|
|
Current portion of capital lease obligations
|
|
46,616
|
|
|
70,725
|
|
|
Accounts payable
|
|
3,999,036
|
|
|
1,447,177
|
|
|
Accrued liabilities
|
|
6,710,438
|
|
|
5,468,849
|
|
|
Deferred revenue
|
|
788,974
|
|
|
861,081
|
|
|
Total current liabilities
|
|
13,045,064
|
|
|
8,472,832
|
|
|
Long-term deferred rent
|
|
1,427,572
|
|
|
1,570,377
|
|
|
Long-term debt obligations
|
|
4,000,000
|
|
|
—
|
|
|
Long-term capital lease obligations
|
|
40,635
|
|
|
39,582
|
|
|
Total liabilities
|
|
18,513,271
|
|
|
10,082,791
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Preferred stock, par value $ 0.001, 1,321,514 shares authorized,
issued and outstanding at September 30, 2015 and December 31, 2014
|
|
1,322
|
|
|
1,322
|
|
|
Common stock, par value $ 0.001, 100,000,000 shares authorized,
27,558,569 and 15,110,924 shares issued, 27,390,919 and 15,088,199
shares outstanding at September 30, 2015 and December 31, 2014
|
|
28,072
|
|
|
15,541
|
|
|
Less treasury stock at cost, 167,650 and 22,725 shares at September
30, 2015 and December 31, 2014
|
|
(184,934
|
)
|
|
(32,221
|
)
|
|
Additional paid-in capital
|
|
81,033,787
|
|
|
64,147,666
|
|
|
Accumulated deficit
|
|
(52,292,904
|
)
|
|
(46,630,651
|
)
|
|
Total stockholders’ equity
|
|
28,585,343
|
|
|
17,501,657
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
47,098,614
|
|
|
$
|
27,584,448
|
|
|
|
|
|
|
Luna Innovations Incorporated
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
Cash flows used in operating activities
|
|
|
|
|
|
Net (loss)/income
|
|
$
|
(5,597,456
|
)
|
|
$
|
6,880,152
|
|
|
Adjustments to reconcile net (loss)/income to net cash used in
operating activities
|
|
|
|
|
|
Depreciation and amortization
|
|
1,548,808
|
|
|
491,066
|
|
|
Share-based compensation
|
|
846,727
|
|
|
738,802
|
|
|
Bad debt expense
|
|
10,375
|
|
|
—
|
|
|
Gain on sale of discontinued operations, net of income taxes
|
|
—
|
|
|
(9,093,268
|
)
|
|
Tax benefit from utilization of net operating loss
|
|
—
|
|
|
(1,437,958
|
)
|
|
Change in assets and liabilities
|
|
|
|
|
|
Accounts receivable
|
|
(328,061
|
)
|
|
139,950
|
|
|
Inventory
|
|
(1,426,968
|
)
|
|
(92,320
|
)
|
|
Other current assets
|
|
(396,671
|
)
|
|
(170,857
|
)
|
|
Other assets
|
|
—
|
|
|
40,715
|
|
|
Accounts payable and accrued expenses
|
|
(897,163
|
)
|
|
(98,920
|
)
|
|
Deferred revenue
|
|
(72,107
|
)
|
|
(286,937
|
)
|
|
Net cash used in operating activities
|
|
(6,312,516
|
)
|
|
(2,889,575
|
)
|
|
Cash flows (used in)/provided by investing activities
|
|
|
|
|
|
Acquisition of property and equipment
|
|
(387,508
|
)
|
|
(199,532
|
)
|
|
Intangible property costs
|
|
(237,245
|
)
|
|
(197,683
|
)
|
|
Proceeds from sale of discontinued operations, net of fees
|
|
—
|
|
|
10,927,268
|
|
|
Cash acquired in business combination
|
|
374,517
|
|
|
—
|
|
|
Net cash (used in)/provided by investing activities
|
|
(250,236
|
)
|
|
10,530,053
|
|
|
Cash flows used in financing activities
|
|
|
|
|
|
Payments on capital lease obligations
|
|
(56,629
|
)
|
|
(49,587
|
)
|
|
Payments of debt obligations
|
|
(6,337,355
|
)
|
|
(1,125,000
|
)
|
|
Proceeds from term loan
|
|
6,000,000
|
|
|
—
|
|
|
Purchase of treasury stock
|
|
(152,713
|
)
|
|
(32,221
|
)
|
|
Proceeds from the exercise of options
|
|
82,516
|
|
|
217,945
|
|
|
Net cash used in financing activities
|
|
(464,181
|
)
|
|
(988,863
|
)
|
|
Net (decrease)/increase in cash or cash equivalents
|
|
(7,026,933
|
)
|
|
6,651,615
|
|
|
Cash and cash equivalents-beginning of period
|
|
14,116,969
|
|
|
7,778,541
|
|
|
Cash and cash equivalents-end of period
|
|
$
|
7,090,036
|
|
|
$
|
14,430,156
|
|
|
|
|
|
|
|
|
Luna Innovations Incorporated
|
|
Reconciliation of Net (Loss)/Income to EBITDA and Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Net (loss)/income
|
|
$
|
(801,689
|
)
|
|
$
|
(744,170
|
)
|
|
$
|
(5,597,456
|
)
|
|
$
|
6,880,152
|
|
|
Less (loss)/income from discontinued operations, net of income taxes
|
|
—
|
|
|
(277,614
|
)
|
|
—
|
|
|
9,065,141
|
|
|
Net loss from continuing operations
|
|
(801,689
|
)
|
|
(466,556
|
)
|
|
(5,597,456
|
)
|
|
(2,184,989
|
)
|
|
Interest expense
|
|
77,417
|
|
|
21,275
|
|
|
136,520
|
|
|
80,942
|
|
|
Tax expense/(benefit)
|
|
16,296
|
|
|
(274,709
|
)
|
|
19,104
|
|
|
(1,419,882
|
)
|
|
Depreciation and amortization
|
|
724,557
|
|
|
154,502
|
|
|
1,548,808
|
|
|
491,066
|
|
|
EBITDA
|
|
16,581
|
|
|
(565,488
|
)
|
|
(3,893,024
|
)
|
|
(3,032,863
|
)
|
|
Share-based compensation
|
|
275,288
|
|
|
250,209
|
|
|
846,727
|
|
|
738,802
|
|
|
Non-recurring charges
|
|
107,677
|
|
|
—
|
|
|
3,649,179
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
$
|
399,546
|
|
|
$
|
(315,279
|
)
|
|
$
|
602,882
|
|
|
$
|
(2,294,061
|
)
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151110006858/en/
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