Luna Reports First Quarter 2013 Financial Results

Luna Reports First Quarter 2013 Financial Results

Company posts net income of $2.8 million following sale of Secure Computing and Communications group; net loss from continuing operations increased to $1.1 million

ROANOKE, Va.--(BUSINESS WIRE)-- Luna Innovations Incorporated (NAS: LUNA) today announced its financial results for the first quarter ended March 31, 2013.

Luna recorded net income attributable to common stockholders of $2.8 million, or $0.17 per diluted share, for the first quarter of 2013 compared to a net loss attributable to common stockholders of $0.4 million, or ($0.03) per diluted share in the first quarter of 2012. The net income in the first quarter of 2013 included a net after-tax gain of $4.0 million realized on the sale of the company's Secure Computing and Communications group ("SCC") in March. Total revenues from continuing operations decreased to $4.5 million in the first quarter of 2013 compared to $6.7 million in the first quarter of 2012, reflecting a decrease of $1.3 million in the Technology Development segment and a decrease of $0.8 million in the Products and Licensing segment. This decrease in revenue was driven primarily by decreased contract research revenue within our optical systems group and lower sales of telecom related test and measurement equipment. Gross profit decreased to $1.4 million for the first quarter of 2013 compared to $2.7 million for the first quarter of 2012. Luna's operating expenses remained steady at $3.3 million in the first quarter of 2013, comparable to the first quarter of the prior year. The resulting net loss from continuing operations, which excludes the effects of SCC's operations prior to its sale and the gain associated with the sale, was $1.1 million for the first quarter of 2013 compared to a net loss from continuing operations of $0.7 million for the first quarter of 2012.

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, and excludes the effects of discontinued operations, declined to ($1.3) million for the first quarter of 2013, as compared to $0.1 million for the first quarter of 2012. With the proceeds from the sale of SCC, our cash and cash equivalents increased to $10.3 million at March 31, 2013 from $7.9 million at March 31, 2012.

"The sale of SCC during the first quarter added significant liquidity to our balance sheet," said My Chung, chief executive officer of Luna. "We are now continuing to focus on our two remaining strategic initiatives for future revenue growth -- shape sensing for minimally invasive medical applications and fiber optic measurement of strain and temperature for a wide variety of industries. We're optimistic about developments in the telecommunications industry pointing to investment in upgrading networks, which provides increased opportunity for our technological solutions. At the same time, we're making great strides with our shape-sensing technology, transitioning toward product integration."

First Quarter Financial and Business Highlights

-- Total revenues decreased by 32%, from $6.7 million in the first quarter of 2012 to $4.5 million in the first quarter of 2013.

-- Technology development revenues decreased by 33%, to $2.6 million for the first quarter of 2013 from $3.9 million for the first quarter of 2012. Products and licensing revenue decreased by 31%, from $2.7 million in the first quarter of 2012 to $1.9 million in the first quarter of 2013.

-- Gross profit for the first quarter of 2013 decreased to $1.4 million, or 31% of total revenues, from $2.7 million, or 41% of total revenues, for the corresponding period of 2012.

-- Selling, general and administrative expenses decreased by 5% to $2.5 million for the first quarter of 2013 from $2.6 million for the first quarter of 2012.

-- Total operating expenses remained consistent at $3.3 million for the first quarter of 2013 and 2012.

-- Adjusted EBITDA decreased to ($1.3) million in the first quarter 2013 from $0.1 million in the first quarter of 2012.

-- Net income attributable to common stockholders improved to $2.8 million for the first quarter of 2013 compared to a net loss attributable to common stockholders to $0.4 million for the first quarter of 2012.

-- Cash and cash equivalents totaled $10.3 million at March 31, 2013 as compared to $7.9 million at March 31, 2012.

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 first quarter of 2013 and expectations for the remainder of 2013. The call can be accessed by dialing 866.515.2907 domestically or 617.399.5121 internationally prior to the start of the call. The participant access code is 23732056. 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 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 it serves.

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 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.