Luna Innovations Incorporated, a company focusing on sensing, instrumentation and nanotechnology, today announced its financial results for the third quarter and nine months ended September 30, 2010.
As compared to the same quarter last year, total revenue decreased by 3%, from $8.9 million in the third quarter of 2009 to $8.6 million in the third quarter of 2010. Revenue in the company’s product and license segment improved by 49%, from $2.4 million in the third quarter of 2009 to $3.6 million in the third quarter of 2010. Technology development revenues decreased by 23% to $5.0 million for the third quarter of 2010 from $6.5 million for the third quarter of 2009.
Operating expenses improved by $1.7 million, or 31%, primarily due to the non-recurring litigation and reorganization costs in 2009 and to the company’s ongoing expense savings initiatives. The company reported a net loss attributable to common stockholders of $0.5 million, or $0.04 per common share, for the third quarter of 2010, as compared to a net loss of $2.0 million, or $0.18 per common share for the third quarter of 2009.
Adjusted EBITDA less litigation- and reorganization-related items improved to $0.9 million for the third quarter of 2010, as compared to $0.8 million for the third quarter of 2009. Adjusted EBITDA reflects the company’s earnings before interest, taxes, depreciation and amortization, non-cash stock-based compensation expense, warrant expense, and non-cash charges for impairment of intangible assets. In addition, the company achieved positive cash flow for the quarter of $0.9 million.
Dale Messick, Interim President and Chief Operating Officer, provided this overview of Luna’s results: “We are extremely pleased to report positive cash flow for the quarter along with a nearly 50% growth in our product and license revenues. As we have anticipated, with the elimination of last year’s litigation and Chapter 11 reorganization expenses from our quarterly results, we have realized significant improvement in our bottom line and in our cash flow.”
Third Quarter Financial and Business Highlights
- Product and license revenues improved by 49%, from $2.4 million in the third quarter of 2009 to $3.6 million in the third quarter of 2010. Technology development revenues decreased by 23% to $5.0 million for the third quarter of 2010 from $6.5 million for the third quarter of 2009.
- Gross profit for the third quarter of 2010 decreased 2% from $3.5 million in the third quarter 2009 to $3.4 million in 2010.
- Selling, general and administrative expenses decreased by $0.5 million to $3.4 million, or 39% of total revenues for the third quarter of 2010, from $3.9 million, or 44% of total revenues, for the third quarter of 2009, driven by a reduction in legal expenses.
- Total operating expenses decreased by 31%, from $5.4 million in the third quarter of 2009 to $3.7 million in the third quarter of 2010, primarily driven by a reduction in litigation and Chapter 11 reorganization expenses, as well as by the company’s ongoing expense savings initiatives.
- Adjusted EBITDA excluding litigation and reorganization-related items increased to $0.9 million in the third quarter of 2010 from $0.8 million in the third quarter of 2009.
- Net loss attributable to common stockholders improved to $0.5 million for the third quarter of 2010, compared to a net loss attributable to common stockholders of $2.0 million for the third quarter of 2009.
- Cash and cash equivalents totaled $7.2 million at September 30, 2010, as compared to $5.7 million at September 30, 2009 and $5.2 million at December 31, 2009. At September 30, 2010, $2.5 million continued to be outstanding under the company’s $5.0 million revolving line of credit.
- Launched the Optical Backscatter Reflectometer(OBR) 4600 product in the third quarter offering high resolution, high sensitivity measurements of optical fiber assemblies and networks up to two kilometers in length with substantially increased speed over predecessor versions of the OBR.
- Increased the backlog for future technology development to $29.6 million at September 30, 2010 compared to $23.5 million at September 30, 2009.
Outlook for 2010
Based on information as of November 9, 2010, the company continues to expect a net loss for the year in the range of $3.0 million to $4.0 million. The company also expects revenue for the year to be in the range of $33.0 million to $34.0 million, a narrowing of the company’s previous revenue guidance of $33.0 million to $35.5 million.
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 non-cash items or they are unusual items that the company does not expect to recur in the ordinary course of its business or 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. (EST) today to discuss its financial results and business developments for the third quarter of 2010. The investor conference call will be available via live webcast on the Luna Innovations website at http://www.lunainnovations.com under the tab "Investor Relations." To participate by telephone, the domestic dial-in number is 866.770.7146 and the international dial-in number is 617.213.8068. The participant access code is 55009308. Investors are advised to dial in at least five minutes prior to the call to register. The webcast will be archived on the company's website under "Webcasts and Presentations" for 30 days following the conference call.
Luna Innovations Incorporated (http://www.lunainnovations.com) is focused on sensing and instrumentation, and pharmaceutical nanomedicines. 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.