Home > Press > Luna Innovations Reports Fourth Quarter and Full Year 2006 Financial Results
Abstract:
Company Achieves 51% Revenue Growth for the Fourth Quarter 2006; Gross Profits Improve to 30% from 17% in Fourth Quarter 2005; Company Provides Guidance for Fiscal Year 2007.
Luna Innovations Reports Fourth Quarter and Full Year 2006 Financial Results
ROANOKE, VA | Posted on March 5th, 2007Luna Innovations Incorporated (Nasdaq: LUNA) today announced its financial results for the
fourth quarter and full year ended December 31, 2006.
Kent Murphy, Chairman and Chief Executive Officer, commented, "The top-
line growth and gross margin expansion we experienced in the fourth quarter
and full year of 2006 were largely propelled by the growth of higher margin
revenues from the sale of products. We are beginning to experience the
benefits and validation of the Luna business model. Product and license
sales accounted for 28% of our revenue, compared to 20% in fourth quarter
of 2005, and 19% in the third quarter of 2006, and as we experienced that
growth, our overall gross profit margin grew from 17% in the fourth quarter
of 2005 to 30% in the fourth quarter of 2006."
Revenues for the fourth quarter of 2006 increased 51% to $8.0 million
from $5.3 million for the same quarter of 2005, reflecting growth in
technology development (contract research) revenues of approximately $1.5
million and growth in product and license revenues of approximately $1.2
million. Gross profit increased to $2.4 million, or 30% of revenues, in the
fourth quarter of 2006, from $0.9 million, or 17% of revenues, in the
fourth quarter of 2005. Operating expenses were $5.3 million in the fourth
quarter of 2006, compared to $4.1 million in the third quarter of 2006 and
$3.1 million in the fourth quarter of 2005. The increase in year over year
operating expense reflects the company's strategy, begun in late 2005, to
increase its product portfolio and product sales, which included the
acquisition of Luna Technologies in September 2005. Operating expenses in
the fourth quarter of 2006 were also higher than the prior quarter because
increased product sales resulted in higher commissions for the company's
internal sales force and third party re- sellers, the company expanded its
leased facilities to accommodate growth, and additional resources were
devoted to preparation of bids and proposals for new technology development
opportunities. During the quarter, the company also incurred approximately
$0.2 million in expenses related to engineering and other start-up costs
associated with recently acquired product lines and $0.3 million in legal
and related costs associated with the successful resolution of a
contractual dispute. The company incurred a loss from operations of $2.9
million in the fourth quarter of 2006, versus a loss from operations of
$2.1 million for the prior year's comparable quarter.
The net loss applicable to common stockholders for the fourth quarter
of 2006 was $2.7 million, or $0.27 per share on a diluted basis, compared
to a net loss applicable to common stockholders of $1.7 million or $0.33
per share, for the fourth quarter of 2005.
Murphy added, "Our Luna Technologies subsidiary saw record fourth
quarter revenue of $1.8 million and record bookings of $2.0 million. We
signed 12 new customers in the fourth quarter, including many top tier
companies, and we signed eight contracts with repeat customers, which
resulted in a 70% growth rate within Luna Technologies compared to the
fourth quarter of 2005. We also acquired the rights to manufacture and sell
a line of swept tunable lasers. We expect the technology will allow us to
compete more effectively in our existing fiber optic test and measurement
markets and open up new markets in industrial and medical sensing. On the
healthcare products side, we continued to ship units of our Emboli
Detection and Classification (EDAC(TM)) product to research institutions
and are currently working through a third party to obtain FDA clearance for
clinical use."
For the year ended December 31, 2006, total revenues were $23.5
million, compared to $16.5 million 2005. Technology development revenue for
2006 increased $3.4 million, or 22%, over 2005. Product and license revenue
was $4.8 million in 2006. Gross profit increased to $7.1 million, or 30% of
revenues, for 2006, from $3.5 million, or 21% of revenues, in 2005.
Operating expenses were $17.1 million in 2006, compared to $6.0 million in
2005. The increase in year over year operating expenses reflects the
company's strategy to increase its product portfolio and product sales.
Operating expenses in 2006 also include share-based compensation expense as
well as administrative costs associated with the company's growing employee
base and its transformation to a public company. The company incurred a
loss from operations of $10.0 million in 2006, versus a loss from
operations of $2.5 million for the prior year.
The net loss applicable to common stockholders for 2006 was $9.4
million, or $1.14 per share on a diluted basis, compared to a net loss
applicable to common stockholders of $2.0 million, or $0.53 per share, for
the previous year.
Fourth Quarter Business Highlights
Technology Development
-- Booked more than $4 million in new technology development contracts
in the fourth quarter 2006, for a total of more than $22 million in
new technology development contracts during the full year 2006.
Healthcare Products
-- Submitted 510(k) documentation for the company's EDAC product to an
FDA-accredited third-party reviewer. The purpose of this review is to
shorten the overall timeframe required to receive FDA clearance and
begin marketing the product for clinical use.
-- Completed preliminary animal testing for the non-invasive diagnosis
of compartment syndrome using the company's EN-TACT(TM) (Emergency
Noninvasive Tissue and Compartment Testing) product.
-- Validated improved MRI image contrast performance using
Trimetasphere(TM) nanomaterials. Improved image contrast is expected,
together with improved safety, to be one of the primary potential
advantages of the company's MRI contrast agent product candidates
over current commercially available products.
Instrumentation, Test and Measurement Products
-- Introduced a new distributed sensing technique that is expected to
significantly reduce the expense associated with the deployment and
maintenance of fiber optics.
-- Acquired the rights to manufacture and sell an existing line of swept
tunable lasers. The company anticipates the technology will allow it
to compete more effectively in the fiber optic test and measurement
markets by providing customers with fast, flexible and cost-effective
test and measurement products. This laser technology also allows the
company to aggressively pursue business opportunities in new markets
such as industrial and medical sensing.
-- Booked over $2 million in product orders during the quarter.
Fourth Quarter Financial Highlights
-- Revenues for the fourth quarter of 2006 increased 51% compared to the
fourth quarter of 2005 and 33% compared to the third quarter of 2006.
-- Product revenues represented over 27% of total revenues in the fourth
quarter of 2006, versus 20% in the fourth quarter of 2005, and 19% in
the third quarter of 2006. Product revenues grew to approximately
$2.2 million in the fourth quarter of 2006, versus $1.2 million in
the third quarter of 2006.
-- Gross profit for the fourth quarter of 2006 increased to $2.4
million, or 30% of revenues, from $0.9 million, or 17% of revenues,
for the corresponding period of 2005.
-- The company reported a loss per share for the fourth quarter of 2006
of $0.27 per share, on a diluted basis, compared to a loss per share
of $0.33 for the fourth quarter of 2005.
-- Cash and cash equivalents totaled $17.9 million at December 31, 2006,
compared to $12.5 million at December 31, 2005.
Outlook for Fiscal Year 2007
The company anticipates continued strong growth in both its product and
technology development divisions in 2007. For fiscal year 2007, the company
expects total revenue to be in the range of $30.0 million to $32.0 million,
consisting of product and license revenue of $7.0 to $8.0 million and
technology development revenue of $23.0 to $24.0 million. For the full year
2007, the company anticipates a net loss in the range of $9.0 to $9.5
million. For the first quarter of 2007, the company expects revenue of
approximately $6.9 million and a net loss of approximately $3.3 million.
The company plans to discuss its fiscal year 2007 guidance on its investor
conference call to be held later today.
Conference Call Information
As previously announced, Luna Innovations will conduct an investor
conference call at 5:00 p.m. (EST) today to discuss the company's fourth
quarter and full year 2006 financial results. The company will also discuss
expectations for 2007. The call can be accessed by dialing 1.800.638.5495
domestically or 1.617.614.3946 internationally prior to the start of the
call. The access code is 46756966. 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 the Luna
Innovations website for at least 30 days following the conference call.
####
About Luna Innovations
Luna Innovations Incorporated researches, develops and commercializes
innovative technologies in molecular technology and sensing solutions. Luna
Innovations accelerates the process of bringing new and innovative products
to market by focusing on technologies that can fulfill identified market
needs and then takes these technologies from the applied research stage
through commercialization. Since its inception, Luna Innovations has
successfully developed products for the energy, telecommunications, life
sciences and defense industries. Headquartered in Roanoke, Virginia, the
company has research, development and manufacturing facilities in
Blacksburg, Charlottesville, Hampton, and Danville, Virginia, and a sales
office in McLean, Virginia. Additional information can be found at
http://www.lunainnovations.com .
( Logo: http://www.newscom.com/cgi-bin/prnh/20060627/LUNALOGO )
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995
This press release includes information that constitutes
"forward-looking statements" made pursuant to the safe harbor provision of
the Private Securities Litigation Reform Act of 1995, including but not
limited to (i) the acquisition of the swept tunable laser technology will
allow the company to compete more effectively in its existing fiber optic
test and measurement markets and open up new markets in industrial and
medical sensing, (ii) the company will aggressively pursue opportunities
for its newly acquired tunable laser technology in industrial and medical
sensing markets, (iii) the FDA- accredited third party review may shorten
the overall time required to receive FDA clearance for the company's EDAC
product, (iv) the company's new distributed sensing technique is expected
to significantly reduce the expense associated with the deployment and
maintenance of fiber optics, (v) the company anticipates continued strong
growth in both its product and technology development divisions in 2007,
and (vi) statements regarding revenue and net loss guidance for fiscal year
2007. 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. Luna Innovations wishes to take advantage of
the "safe harbor" provided by the Private Securities Litigation Reform Act
of 1995 and you are cautioned that 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: the company's ability to manage its growth effectively; the company's
ability to successfully identify market needs for new products; the
company's continued reliance on contract research, including government
grants and contracts available only to small businesses, for a significant
portion of its revenue; the risk that the company may become ineligible for
small business government grants and contracts in the future; the effect of
competition in its markets and changes in customer demand; the risk that
company's proprietary rights may be insufficient to protect its
technologies, including potential claims by third parties that the company
infringes their intellectual property rights; the potential impact of
federal audits and investigations; delay in obtaining clearance by the U.S.
Food and Drug Administration or other regulatory requirements; continued
difficulty in, or increased costs related to, hiring, training and
retaining skilled employees; unanticipated manufacturing or supply
problems; a slowdown in the overall economy; and uncertainty in the global
political environment. Additional factors that may affect the future
results of the company are set forth in its Registration Statement on Form
S-1, its 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 Luna Innovations' website at http://www.lunainnovations.com . These
risk factors are updated from time to time through the filing of periodic
reports and registration statements with the SEC. The statements made in
this press 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 herein after the date of this
press release.
Luna Innovations Incorporated
Consolidated Balance Sheets
December 31, December 31,
2006 2005
-------------- --------------
Assets (unaudited)
Current assets
Cash and cash equivalents $ 17,866,753 $ 12,514,839
Accounts receivable, net 7,233,406 5,129,911
Refundable income taxes 396,062 514,797
Inventory 843,294 448,475
Other current assets 503,703 227,409
-------------- --------------
Total current assets 26,843,218 18,835,431
Property and equipment, net 5,730,094 2,972,287
Intangible assets, net 2,031,489 999,544
Deferred offering costs - 710,018
Deferred tax asset 600,000 600,000
Other assets 12,413 16,550
-------------- --------------
Total assets $ 35,217,214 $ 24,133,830
============== ==============
Liabilities and stockholders' equity
Current liabilities
Current portion of capital lease
obligation $ 88,576 $ 98,820
Current portion of long-term debt
obligation 214,955 -
Accounts payable 2,757,381 3,647,505
Accrued liabilities 3,623,395 1,788,162
Deferred credits 874,676 1,458,393
-------------- --------------
Total current liabilities 7,558,983 6,992,880
Long-term capital lease obligation 28,557 117,134
Long-term debt obligation 5,000,000 5,214,955
Deferred credits and other long term
liabilities 554,418 450,000
-------------- --------------
Total liabilities 13,141,958 12,774,969
-------------- --------------
Redeemable Class B common stock, 308,216
shares at December 31, 2005 - 504,984
-------------- --------------
Stockholders' equity:
Preferred stock, par value $0.001,
5,000,000 shares authorized at December
31, 2006, no shares issued and
outstanding at December 31, 2006 - -
Common stock
Common stock, par value $0.001,
100,000,000 and 23,257,094 shares
authorized at December 31, 2006 and
December 31, 2005, respectively,
9,911,546 shares issued and outstanding
at December 31, 2006 9,912 -
Class A voting common stock, par value
$0.001, 7,164,463 shares authorized at
December 31, 2005, 2,834,814 shares
issued and outstanding at December 31,
2005 - 2,835
Class B non-voting common stock, par
value $0.001, 13,707,297 shares
authorized at December 31, 2005,
734,427 shares issued and outstanding
at December 31, 2005 - 734
Class C voting common stock, par value
$0.001, 5,656,472 shares authorized at
December 31, 2005, 2,131,474 shares
issued and outstanding at December 31,
2005 - 2,131
Additional paid-in capital 31,585,762 10,935,049
Accumulated deficit (9,520,418) (86,872)
-------------- --------------
Total stockholders' equity 22,075,256 10,853,877
-------------- --------------
Total liabilities and stockholders'
equity $ 35,217,214 $ 24,133,830
============== ==============
Luna Innovations Incorporated
Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------ ------------ ------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
(unaudited) (unaudited)
Revenues:
Contract research
revenues $ 5,810,797 $ 4,267,946 $18,787,863 $15,379,667
Product and license
revenues 2,236,376 1,074,221 4,757,779 1,074,221
------------ ------------ ------------ ------------
Total revenues 8,047,173 5,342,167 23,545,642 16,453,888
Cost of revenues:
Contract research
costs 4,631,659 4,012,555 14,232,063 12,552,122
Product and license
costs 983,166 409,772 2,178,135 409,772
------------ ------------ ------------ ------------
Total cost of
revenues 5,614,825 4,422,327 16,410,198 12,961,894
------------ ------------ ------------ ------------
Gross Profit 2,432,348 919,840 7,135,444 3,491,994
Operating expense 5,303,766 3,050,978 17,109,043 6,003,644
------------ ------------ ------------ ------------
Operating loss (2,871,418) (2,131,138) (9,973,599) (2,511,650)
------------ ------------ ------------ ------------
Other income (expense)
Other income
(expense) 22,548 1,684 32,879 1,592
Interest income /
(expense), net 170,024 33,955 515,818 (41,251)
------------ ------------ ------------ ------------
Total other income
(expense) 192,572 35,639 548,697 (39,659)
------------ ------------ ------------ ------------
Loss before income
taxes (2,678,846) (2,095,499) (9,424,902) (2,551,309)
Income tax expense
(benefit) - (369,979) 12,829 (557,252)
------------ ------------ ------------ ------------
Net loss $(2,678,846) $(1,725,520) $(9,437,731) $(1,994,057)
============ ============ ============ ============
Net loss per share:
Basic $ (0.27) $ (0.33) $ (1.14) $ (0.53)
============ ============ ============ ============
Diluted $ (0.27) $ (0.33) $ (1.14) $ (0.53)
============ ============ ============ ============
Weighted average
shares:
Basic 9,883,057 5,254,336 8,283,074 3,735,811
============ ============ ============ ============
Diluted 9,883,057 5,254,336 8,283,074 3,735,811
============ ============ ============ ============
Luna Innovations Incorporated
Consolidated Statements of Cash Flows
Twelve Months Ended
December 31,
----------------------------
2006 2005
------------- -------------
(unaudited)
Cash flows used in operating activities
Net loss $ (9,437,731) $ (1,994,057)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,134,777 540,145
Deferred income taxes - (157,251)
Share-based compensation 1,762,899 168,926
Change in assets and liabilities:
Accounts receivable (2,103,495) (1,314,485)
Refundable income taxes 118,735 362,005
Other assets (654,560) (26,194)
Accounts payable and accrued expenses 723,445 1,911,095
Deferred revenues (679,299) 422,227
------------- -------------
Net cash used in operating activities (9,135,229) (87,589)
------------- -------------
Cash flows used in investing activities
Acquisition of property and equipment (2,828,046) (877,144)
Intangible property costs (558,909) (430,847)
Net cash from acquisition of Luna
Technologies - 33,676
Capitalized software development costs - (122,642)
------------- -------------
Net cash used in investing activities (3,386,955) (1,396,957)
------------- -------------
Cash flows from financing activities
Net payments on line of credit - (1,500,000)
Payments on capital lease obligations (98,819) (107,177)
Proceeds from convertible debt 5,000,000
Proceeds from the issuance of common stock,
net 17,881,900 9,912,468
Proceeds from the exercise of options and
warrants 91,017 84,458
------------- -------------
Net cash from financing activities 17,874,098 13,389,749
------------- -------------
Net change in cash 5,351,914 11,905,203
Cash - beginning of period 12,514,839 609,636
------------- -------------
Cash - end of period $ 17,866,753 $ 12,514,839
============= =============
Supplemental disclosure of cash flow
information
Cash paid for interest $ 45,341 $ 108,211
Cash paid for income taxes $ 12,829 $ -
Property and equipment financed by capital
leases $ - $ 11,700
For more information, please click here
Contacts:
Contact Luna by phone at 1.540.769.8400
by mail at 1703 South Jefferson Street SW Suite 400, Roanoke, VA 24016
or by
e-mail at
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