Exhibit 99.1
| | |
| | Release Luna Innovations Incorporated 1 Riverside Circle, Suite 400 Roanoke, VA 24016 |
Luna Innovations Reports Second Quarter 2012 Financial Results
Net loss improves 6% from prior year quarter; Total revenues decrease 15% over prior
year quarter; Operating expenses decrease 14% from prior year quarter
(ROANOKE, VA, August 9, 2012)– Luna Innovations Incorporated (NASDAQ: LUNA) today announced its financial results for the second quarter and six months ended June 30, 2012.
As compared to the same quarter last year, total revenue decreased by 15%, from $9.6 million in the second quarter of 2011 to $8.2 million in the second quarter of 2012, driven primarily by the continued softness in the telecom test and measurement market that has negatively affected the company’s products and licensing revenues since the third quarter of 2011. Gross profit decreased from $3.7 million for the second quarter of 2011 to $3.1 million for the second quarter of 2012 with overall margins unchanged at 38%. Offsetting these declines, operating expenses improved 14% to $3.3 million in the second quarter of 2012 compared to $3.9 million in the second quarter of 2011. The company reported a net loss attributable to common stockholders of $269,000, or $0.02 per common share for the second quarter of 2012, an improvement of 7% compared to a net loss of $289,000 in the same quarter last year. Adjusted EBITDA, a non-GAAP measure, which is earnings before interest, taxes, and non-cash expenses of stock based compensation, depreciation, amortization and warrant expense, decreased to $0.5 million for the second quarter of 2012, as compared to $0.7 million for the second quarter of 2011. Cash decreased to $6.6 million at June 30, 2012 compared to $8.1 million at June 30, 2011.
“Our products and licensing revenues for the most recent quarter were consistent with our quarterly revenues since the third quarter of last year, when the telecom test and measurement sector as a whole declined significantly. Our products and licensing revenues over the past four quarters have consistently ranged $2.7 million to $3.1 million. Our growth strategy for the future includes expansion of our products into markets for fiber optic sensing led by our new ODiSI platform. I am pleased that we did complete the roll-out of our new ODiSI-B product with the first
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 2 |
shipments of the product realized in the second quarter,” said My Chung, chief executive officer of Luna. “Becoming the leading provider of sensing systems for testing composite materials is one of our key strategies; therefore, we are encouraged by these initial customer purchases and committed to continuing to evolve our solution to respond to the needs of our customers. In addition, we have continued to make solid progress in driving our other strategic growth initiatives, focusing on our fiber-optic shape sensing for medical applications and our cybersecurity solutions.”
Second Quarter Financial and Business Summary
| • | | Total revenues decreased by 15%, from $9.6 million in the second quarter of 2011 to $8.2 million in the second quarter of 2012. |
| • | | Technology development revenues decreased by 5%, to $5.3 million, for the second quarter of 2012, from $5.6 million for the second quarter of 2011. Technology development revenues decreased by 6% compared to the first quarter of 2012. |
| • | | Products and licensing revenue decreased by 29%, from $4.0 million in the second quarter of 2011 to $2.8 million in the second quarter of 2012. Products and licensing revenue increased 5% over the first quarter of 2012 |
| • | | Gross profit for the second quarter of 2012 decreased to $3.1 million, or 38% of total revenues, from $3.7 million, or 38% of total revenues, for the corresponding period of 2011. |
| • | | Selling, general and administrative expenses decreased by 17% to $2.7 million, or 33% of total revenues for the second quarter of 2012, from $3.3 million, or 34% of total revenues, for the second quarter of 2011. |
| • | | Total operating expenses decreased to $3.3 million, or 41% of total revenues, for the second quarter of 2012 from $3.9 million, or 40% of total revenues for the second quarter of 2011. |
| • | | Adjusted EBITDA decreased to $0.5 million in the second quarter 2012 from $0.7 million in the second quarter of 2011. |
| • | | Net loss attributable to common stockholders for the second quarter of 2012 decreased to $269,000 from $289,000 for the second quarter of 2011. |
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 3 |
| • | | Cash and cash equivalents totaled $6.6 million at June 30, 2012, as compared to $7.9 million at March 31, 2012. Cash and cash equivalents decreased primarily due to payment of liabilities accrued as of December 31, 2011. |
Six Months Ended June 30, 2012 Financial Summary
| • | | Total revenue decreased by 11% to $16.6 million for the six months ended June 30, 2012 compared to $18.6 million for the six months ended June 30, 2011. |
| • | | Technology development revenues decreased by 2%, from $11.2 million for the six months ended June 30, 2011 to $11.0 million for the six months ended June 30, 2012. Technology development revenues for the six months ended June 30, 2012 decreased by 2% from the immediately preceding six month period. |
| • | | Products and licensing revenue decreased by 25%, from $7.4 million for the six months ended June 30, 2011 to $5.6 million for the six months ended June 30, 2012. Products and licensing revenue for the six months ended June 30, 2012 decreased 4% from the immediately preceding six month period. |
| • | | Gross profit for the six months ended June 30, 2012 decreased by 9%, to $6.4 million, compared to a gross profit of $7.0 million for the six months ended June 30, 2011. Gross margin percentages remained steady at 38% of revenues for the first six months of 2012 and 2011. |
| • | | Selling, general and administrative expenses decreased by 20% from $6.9 million, or 37% of total revenues, for the six months ended June 30, 2011 to $5.5 million, or 33% of total revenues, for the six months ended June 30, 2012. |
| • | | Total operating expenses decreased by 16% to $6.8 million, or 41% of total revenues, for the six months ended June 30, 2012 compared to $8.1 million, or 44% of total revenues, for the six months ended June 30, 2011. |
| • | | Adjusted EBITDA increased by 10% to $1.1 million for the six months ended June 30, 2012 from $1.0 million for the six months ended June 30, 2011. |
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 4 |
| • | | Net loss attributable to common stockholders improved to $0.6 million for the six months ended June 30, 2012, compared to a net loss attributable to common stockholders of $1.4 million for the six months ended June 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 Innovations will conduct an investor conference call at 5:00 p.m. (EDT) today to discuss its financial results and business developments for the second quarter of 2012 and expectations for the remainder of 2012. The call can be accessed by dialing800.659.1942domestically or617.614.2710internationally prior to the start of the call. The participant access code is79070603.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 the Luna 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 in Roanoke, Virginia.
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 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 atwww.sec.gov and at the company’s website atwww.lunainnovations.com. The statements made in this release are based on information available to the company as of the date of this release and Luna 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 | | Luna Q212 Earnings, Page 6 |
Luna Innovations Incorporated
Condensed Consolidated Statements of Operations
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30 , | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Revenues: | | | | | | | | | | | | | | | | |
Technology development revenues | | $ | 5,334,320 | | | $ | 5,623,074 | | | $ | 10,993,816 | | | $ | 11,244,689 | |
Product and licensing revenues | | | 2,845,864 | | | | 4,000,515 | | | | 5,559,677 | | | | 7,377,525 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 8,180,184 | | | | 9,623,589 | | | | 16,553,493 | | | | 18,622,214 | |
| | | | |
Cost of revenues: | | | | | | | | | | | | | | | | |
Technology development costs | | | 3,768,081 | | | | 4,194,442 | | | | 7,670,979 | | | | 8,280,608 | |
Product and license costs | | | 1,267,201 | | | | 1,767,778 | | | | 2,514,696 | | | | 3,340,469 | |
| | | | | | | | | | | | | | | | |
Total cost of revenues | | | 5,035,282 | | | | 5,962,220 | | | | 10,185,675 | | | | 11,621,077 | |
| | | | | | | | | | | | | | | | |
Gross Profit | | | 3,144,902 | | | | 3,661,369 | | | | 6,367,818 | | | | 7,001,137 | |
| | | | |
Operating expense: | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | 2,706,983 | | | | 3,251,073 | | | | 5,517,494 | | | | 6,929,593 | |
Research, development, and engineering | | | 629,347 | | | | 620,470 | | | | 1,314,311 | | | | 1,180,159 | |
| | | | | | | | | | | | | | | | |
Total operating expense | | | 3,336,330 | | | | 3,871,543 | | | | 6,831,805 | | | | 8,109,752 | |
| | | | | | | | | | | | | | | | |
Operating loss | | | (191,428 | ) | | | (210,174 | ) | | | (463,987 | ) | | | (1,108,615 | ) |
| | | | |
Other expense, net: | | | | | | | | | | | | | | | | |
Other income/(expense), net | | | 23,265 | | | | 37,823 | | | | 46,533 | | | | 35,835 | |
Interest expense | | | (74,357 | ) | | | (84,303 | ) | | | (154,015 | ) | | | (198,725 | ) |
| | | | | | | | | | | | | | | | |
Total other expense | | | (51,092 | ) | | | (46,480 | ) | | | (107,482 | ) | | | (162,890 | ) |
| | | | |
Loss before income taxes | | | (242,520 | ) | | | (256,654 | ) | | | (517,469 | ) | | | (1,271,505 | ) |
Income tax expense | | | — | | | | — | | | | 5,799 | | | | 10,020 | |
| | | | | | | | | | | | | | | | |
Net loss | | | (242,520 | ) | | | (256,654 | ) | | | (577,268 | ) | | | (1,281,525 | ) |
| | | | |
Preferred stock dividend | | | 26,784 | | | | 32,708 | | | | 60,880 | | | | 74,336 | |
| | | | |
Net loss attributable to common stockholders | | $ | (269,304 | ) | | $ | (289,362 | ) | | $ | (638,148 | ) | | $ | (1,355,861 | ) |
| | | | | | | | | | | | | | | | |
Net loss per share of common stock: | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.05 | ) | | $ | (0.10 | ) |
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 7 |
Luna Innovations Incorporated
Condensed Consolidated Balance Sheets
| | | | | | | | |
| | | June 30,
2012 | | | December 31,
2011 | |
| | | (unaudited) | | | | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 6,639,519 | | | $ | 8,939,127 | |
Accounts receivable, net | | | 7,170,950 | | | | 5,958,086 | |
Inventory, net | | | 3,395,620 | | | | 3,330,773 | |
Prepaid expenses | | | 921,149 | | | | 1,071,438 | |
Other current assets | | | 35,717 | | | | 35,717 | |
| | | | | | | | |
Total current assets | | | 18,162,955 | | | | 19,335,141 | |
Property and equipment, net | | | 2,556,583 | | | | 2,816,674 | |
Intangible assets, net | | | 455,460 | | | | 539,563 | |
Other assets | | | 190,460 | | | | 228,043 | |
| | | | | | | | |
Total assets | | $ | 21,365,458 | | | $ | 22,919,421 | |
| | | | | | | | |
Liabilities and stockholders’ equity | | | | | | | | |
Liabilities: | | | | | | | | |
Current Liabilities | | | | | | | | |
Current portion of long term debt obligation | | | 1,500,000 | | | | 1,625,000 | |
Current portion of capital lease obligation | | | 52,496 | | | | 50,949 | |
Accounts payable | | | 1,854,041 | | | | 1,656,602 | |
Accrued liabilities | | | 2,579,446 | | | | 3,612,193 | |
Deferred credits | | | 1,134,112 | | | | 1,462,603 | |
| | | | | | | | |
Total current liabilities | | | 7,120,095 | | | | 8,407,347 | |
Long-term debt obligation | | | 3,000,000 | | | | 3,625,000 | |
Long-term lease obligation | | | 156,367 | | | | 183,008 | |
| | | | | | | | |
Total liabilities | | | 10,276,462 | | | | 12,215,355 | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Preferred stock | | | 1,322 | | | | 1,322 | |
Common stock | | | 14,091 | | | | 13,969 | |
Additional paid-in capital | | | 60,312,472 | | | | 59,289,516 | |
Accumulated deficit | | | (49,238,889 | ) | | | (48,600,741 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 11,088,996 | | | | 10,704,066 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 21,365,458 | | | $ | 22,919,421 | |
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 8 |
Luna Innovations Incorporated
Condensed Consolidated Statements of Cash Flows
| | | | | | | | |
| | | Six months ended | |
| | | June 30, | |
| | | 2012 | | | 2011 | |
| | | (unaudited) | |
Cash (used in)/provided by operating activities | | | | | | | | |
Net loss | | $ | (577,268 | ) | | $ | (1,281,525 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | | | | | | | | |
Depreciation and amortization | | | 528,113 | | | | 710,269 | |
Share-based compensation | | | 928,368 | | | | 1,275,147 | |
Warrant expense | | | 12,032 | | | | 38,893 | |
Change in assets and liabilities: | | | | | | | | |
Accounts receivable | | | (1,212,864 | ) | | | 994,149 | |
Inventory | | | (69,186 | ) | | | (665,883 | ) |
Other current assets | | | 150,289 | | | | (22,503 | ) |
Other assets | | | 37,583 | | | | 37,583 | |
Accounts payable and accrued expenses | | | (847,341 | ) | | | 111,900 | |
Deferred credits | | | (328,491 | ) | | | 103,138 | |
| | | | | | | | |
Net cash (used in)/provided by operating activities | | | (1,378,765 | ) | | | 1,301,168 | |
| | | | | | | | |
Cash flows used in investing activities | | | | | | | | |
Acquisition of property and equipment | | | (123,732 | ) | | | (173,945 | ) |
Intangible property costs | | | (55,847 | ) | | | (199,741 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (179,579 | ) | | | (373,686 | ) |
| | | | | | | | |
Cash flows used in financing activities | | | | | | | | |
Payments on capital lease obligations | | | (25,094 | ) | | | (18,030 | ) |
Proceeds from debt obligations | | | — | | | | 6,000,000 | |
Payment of debt obligations | | | (750,000 | ) | | | (6,242,394 | ) |
Proceeds from the exercise of options and warrants | | | 33,830 | | | | 182,368 | |
| | | | | | | | |
Net cash used in financing activities | | | (741,264 | ) | | | (78,056 | ) |
| | | | | | | | |
Net change in cash | | | (2,299,608 | ) | | | 849,426 | |
Cash and cash equivalents, beginning of period | | | 8,939,127 | | | | 7,216,580 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 6,639,519 | | | $ | 8,066,006 | |
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| LUNA INNOVATIONS INCORPORATED | | Luna Q212 Earnings, Page 9 |
Luna Innovations Incorporated
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Net loss | | $ | (242,520 | ) | | $ | (256,654 | ) | | $ | (577,268 | ) | | $ | (1,281,525 | ) |
Interest expense | | | 74,357 | | | | 84,303 | | | | 154,015 | | | | 198,725 | |
Income tax expense | | | — | | | | — | | | | 5,799 | | | | 10,020 | |
Depreciation and amortization | | | 244,012 | | | | 382,856 | | | | 528,113 | | | | 710,269 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | 75,849 | | | | 210,505 | | | | 110,659 | | | | (362,511 | ) |
Stock-based compensation and warrant expense | | | 473,930 | | | | 472,328 | | | | 940,400 | | | | 1,314,040 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 549,779 | | | $ | 682,833 | | | $ | 1,051,059 | | | $ | 951,529 | |
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Investor Contact:
Dale Messick, CFO
Luna Innovations Incorporated
Phone:1.540.769.8400
Email:IR@lunainnovations.com
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