Stony Brook-based Applied DNA Sciences reported another down quarter Thursday, with company officials blaming declines on shifting demands for the biotech’s proprietary security solutions.
Reporting results for the third quarter of its fiscal 2016, which ended June 30, the company noted revenues of $653,000, a 71 percent dive from the $2.3 million reported in 3Q FY2015.
The lower revenues – which actually bested the $573,000 reported in 2Q FY2016, which ended March 31 – were primarily attributable to “scheduled lower revenue” from two government contracts and a decrease in textile industry sales, the company said in a statement.
The slight quarter-over-quarter revenue increase was credited primarily to healthy activity in the company’s consumer asset-marking business.
That was a thin silver lining, however, with most of Applied DNA Sciences’ other financial indicators suffering bruising third-quarter hits. Total quarterly operating expenses increased only $143,000, to $4 million, but the company’s net quarterly loss was $3.4 million – twice the $1.7 million third-quarter loss reported last year, increasing per-share losses from 8 cents to 14 cents.
And Applied DNA Sciences reported much less cash and cash equivalents on hand at the end of the third quarter: $7.1 million, down from the $9.8 million reported at the end of the second quarter on March 31, “due primarily to the use of cash to fund operations,” the company said.
Excluding non-cash expenses, adjusted EBITDA for the third quarter was negative $2.6 million, a painful leap from the negative adjusted EBITDA of $479,000 reported at the end of 3Q FY2015.
Looking through a nine-month window, the numbers were more mixed.
Applied DNA Sciences recorded nine-month revenues of $2.6 million, a 49 percent decrease from the same nine-month period in FY2015, with expiring government contracts cited as the main culprit.
But over the first nine months of FY2016, the company also recorded lower operating expenses – $229,000 total, a 2 percent decrease from the first nine months of FY2015 – and a net loss of $9.8 million, or 41 cents per share, which compares favorably to the $11.4 million net loss, or 63 cents per share, reported over the first three quarters of last fiscal year.
James Hayward, chairman and CEO of the Stony Brook-based provider of DNA-based anti-theft technologies and product-authentication solutions, acknowledged the company’s emphasis on the emerging textile market had a definite effect on third-quarter results.
“As we become further entrenched in the cotton supply chain, and demand for our SigNature T solution aligns with the industry’s seasonality that is centered on the ginning season running from September through January, the slope of demand has changed relative to last season,” Hayward said Thursday. “As a result, our third-quarter results reflect lower-than-expected revenues.”
But Applied DNA Sciences expects that to turn around quickly. Hayward referenced a recent order to mark 10 million pounds of cotton – “a market segment in which we had no presence last season,” he noted – and growth in quarterly revenues from Applied DNA’s fiberTyping segment, both “evidence of the cotton industry’s continued adoption of DNA marking.”
The chairman also promoted the development of Applied DNA Sciences’ other “commercial opportunities,” noting “several pilot projects with commercial industrial products markets that relate to higher throughput marking, validation and authentication systems.”
“These pilot projects should convert into commercial-scale deployments and serve to further diversify our revenue stream,” he said.
Other quarterly highlights in Hayward’s Thursday conference call with investors included the May 16 announcement of a new two-year agreement with Swedish distributor Safesolution to mark a minimum of 2,000 new vehicles entering Sweden each year with DNA-based anti-theft solutions.
Thursday’s reported marked the third straight less-than-stellar quarter for Applied DNA Sciences – including a first quarter where the company missed analyst estimates and a second quarter in which year-over-year revenues plunged 62 percent – following a string of revenue-record-setting quarters.