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Mon. 9 Aug 2021, 4:15pm ETBenzinga
In: Press Releases

Delivers Record Revenue and Reaffirms 2021 Outlook

Highlights

  • Total revenues of $27.9 million for the three months ended June 30, 2021, up 50% compared to the three months ended June 30, 2020
  • Operating loss of $1.0 million for the three months ended June 30, 2021, versus operating income of $1.8 million for the three months ended June 30, 2020; primarily due to $1.5 million of transaction-related costs
  • Net loss of $0.2 million for the three months ended June 30, 2021, compared to net income of $1.4 million for the three months ended June 30, 2020
  • Adjusted EBITDA of $2.1 million for the three months ended June 30, 2021, compared to $3.0 million for the three months ended June 30, 2020
  • Adjusted EPS of $0.06 for each of the three months ended June 30, 2021 and 2020
  • Company reaffirms 2021 outlook

Luna Innovations Incorporated (NASDAQ:LUNA), a global leader in advanced optical technology, today announced its financial results for the three and six months ended June 30, 2021.

"I couldn't be more thrilled about delivering record revenue, despite challenges such as a very difficult supply chain environment, all while integrating the largest acquisition in the company's history," said Scott Graeff, President and Chief Executive Officer of Luna. "As I mentioned on our last earnings call, 2021 marks another inflection point of growth. We continue to invest in our business as we build for Luna's future, including adding several experienced executives to my team this quarter. These professionals each have track records in growing larger public companies. We remain excited about Luna's strategy and future, which is why we are reaffirming the guidance that we first provided in March."

Second-Quarter Fiscal 2021 Financial Summary

Highlights of the financial results for the three months ended June 30, 2021 are:

 

 

Three Months Ended June 30,

 

 

(in thousands, except share and per share data)

 

2021

 

2020

 

Change

Revenues:

 

 

 

 

 

 

Lightwave

 

$

21,965

 

 

$

12,933

 

 

70

%

Luna Labs

 

 

5,972

 

 

 

5,643

 

 

6

%

Total revenues

 

 

27,937

 

 

 

18,576

 

 

50

%

 

 

 

 

 

 

 

Gross profit

 

 

13,950

 

 

 

9,517

 

 

47

%

Gross margin

 

 

50

%

 

 

51

%

 

 

 

 

 

 

 

 

 

Operating expense

 

 

14,952

 

 

 

7,707

 

 

94

%

Operating (loss)/income

 

 

(1,002

)

 

 

1,810

 

 

(155

)%

Operating margin

 

 

(4

)%

 

 

10

%

 

 

 

 

 

 

 

 

 

Other (expense)/income and income tax benefit/(expense)

 

 

772

 

 

 

(441

)

 

275

%

 

 

 

 

 

 

 

Net (loss)/income

 

$

(230

)

 

$

1,369

 

 

117

%

 

 

 

 

 

 

 

Earnings per diluted share (EPS)

 

$

(0.01

)

 

$

0.04

 

 

(125

)%

Adjusted EPS

 

$

0.06

 

 

$

0.06

 

 

%

Diluted weighted average shares outstanding

 

 

33,500,801

 

 

 

32,494,950

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

2,143

 

 

$

2,955

 

 

(27

)%

A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable GAAP figures can be found in the schedules included in this release.

Lightwave revenues for the three months ended June 30, 2021 increased compared to the prior-year period, primarily due to acquisitions and strength in the telecommunications, aerospace and defense markets. Luna Labs revenue increased for the three months ended June 30, 2021, compared to the prior-year period, due to growth in various government research projects.

Gross margin decreased to 50% for the three months ended June 30, 2021, compared to 51% for the three months ended June 30, 2020, driven primarily by lower gross margin in Luna's Lightwave division. Operating income/(loss) and margin declined to $(1.0) million and (4)% of total revenues, respectively, for the three months ended June 30, 2021, compared to $1.8 million and 10% of total revenues, respectively, for the three months ended June 30, 2020. The decrease in operating income was primarily due to $1.0 million integration and transaction costs, as well as $0.5 million of amortization of intangible assets and inventory step-up related to Luna's recently completed acquisitions and its continuing portfolio activities.

Net loss was $0.2 million, or $0.01 per fully diluted share, for the three months ended June 30, 2021, compared to net income of $1.4 million, or $0.04 per fully diluted share, for the three months ended June 30, 2020. Adjusted EPS was $0.06 for each of the three months ended June 30, 2021 and 2020.

Adjusted EBITDA was $2.1 million for the three months ended June 30, 2021, compared to $3.0 million for the three months ended June 30, 2020. The decrease was driven by lower income from continuing operations.

Six Months Ended Fiscal 2021 Financial Summary

Highlights of the financial results for the six months ended June 30, 2021 are:

 

 

Six months ended June 30,

 

 

(in thousands, except share and per share data)

 

2021

 

2020

 

Change

Revenues:

 

 

 

 

 

 

Lightwave

 

$

42,962

 

 

$

24,487

 

 

75

%

Luna Labs

 

 

11,274

 

 

 

11,230

 

 

%

Total revenues

 

 

54,236

 

 

 

35,717

 

 

52

%

 

 

 

 

 

 

 

Gross profit

 

 

27,379

 

 

 

17,881

 

 

53

%

Gross margin

 

 

50

%

 

 

50

%

 

 

 

 

 

 

 

 

 

Operating expense

 

 

29,175

 

 

 

15,681

 

 

86

%

Operating (loss)/income

 

 

(1,796

)

 

 

2,200

 

 

(182

)%

Operating margin

 

 

(3

)%

 

 

6

%

 

 

 

 

 

 

 

 

 

Other (expense)/income and income tax benefit/(expense)

 

 

1,248

 

 

 

(511

)

 

344

%

 

 

 

 

 

 

 

Net (loss)/income from continuing operations

 

$

(548

)

 

$

1,689

 

 

(132

)%

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax of $464

 

 

 

 

 

(1,436

)

 

 

 

 

 

 

 

 

 

Net (loss)/income

 

$

(548

)

 

$

253

 

 

317

%

 

 

 

 

 

 

 

Earnings per diluted share (EPS)

 

$

(0.02

)

 

$

0.01

 

 

(300

)%

Adjusted EPS

 

$

0.10

 

 

$

0.09

 

 

11

%

Diluted weighted average shares outstanding

 

 

33,487,109

 

 

 

32,466,122

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

4,291

 

 

$

4,535

 

 

(5

)%

A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable GAAP figures can be found in the schedules included in this release.

Lightwave revenues for the six months ended June 30, 2021 increased compared to the prior-year period, primarily due to acquisitions and increased revenues from both sensing and communication test businesses. Luna Labs revenue increased for the six months ended June 30, 2021, compared to the prior-year period, due to growth in various government research projects.

Gross margin of 50% for the six months ended June 30, 2021 was flat compared to 50% for the six months ended June 30, 2020. Operating income/(loss) and margin declined to $(1.8) million and (3)% of total revenues, respectively, for the six months ended June 30, 2021, compared to $2.2 million and 6% of total revenues, respectively, for the six months ended June 30, 2020. The decrease in operating income was primarily due to $1.9 million integration and transaction costs, as well as $1.0 million of amortization of intangible assets and inventory step-up related to Luna's recently completed acquisitions and its continuing portfolio activities.

Net loss was $0.5 million, or $0.02 per fully diluted share, for the six months ended June 30, 2021, compared to a net income of $0.3 million, or $0.01 per fully diluted share, for the six months ended June 30, 2020. Adjusted EPS was $0.10 for the six months ended June 30, 2021, compared to $0.09 for the six months ended June 30, 2020.

Adjusted EBITDA was $4.3 million for the six months ended June 30, 2021, compared to $4.5 million for the six months ended June 30, 2020.

2021 Full-Year Outlook

Luna is reaffirming its full-year guidance:

  • Total revenues of $122 million to $127 million
  • Adjusted EBITDA of $16 million to $19 million

Adjusted EBITDA is a non-GAAP measure. Luna is not providing an outlook for net income/(loss), which is the most directly comparable generally accepted accounting principles ("GAAP") measure to Adjusted EBITDA, because changes in the items that Luna excludes from net income to calculate Adjusted EBITDA, such as share-based compensation, tax expense, and significant non-recurring charges, among other things, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of Luna's routine operating activities.

The outlook above does not include any future acquisitions, divestitures, or unanticipated events.

Non-GAAP Financial Measures

In evaluating the operating performance of its business, Luna's management considers Adjusted EBITDA, which excludes certain charges and credits that are required by GAAP. Adjusted EBITDA and Adjusted EPS provide useful information to both management and investors by excluding the effect of certain non-cash expenses and items that Luna believes may not be indicative of its operating performance, because either they are unusual and Luna 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. Adjusted EBITDA and Adjusted EPS should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Adjusted EBITDA and Adjusted EPS 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 pm (ET) today to discuss its financial results for the three and six months ended June 30, 2021. The investor conference call will be available via live webcast on the Luna website at www.lunainc.com under the tab "Investor Relations." To participate by telephone, the domestic dial-in number is 844.578.9643 and the international dial-in number is 270.823.1522. The participant access code is 2326659. 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.

About Luna

Luna Innovations Incorporated (www.lunainc.com) is a leader in optical technology, providing unique capabilities in high-performance, fiber optic-based, test products for the telecommunications industry and distributed fiber optic-based sensing for the aerospace and automotive industries. Luna is organized into two business segments, which work closely together to turn ideas into products: a Lightwave segment and a Luna Labs segment. Luna's business model is designed to accelerate the process of bringing new and innovative technologies to market.

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 Luna's expectations regarding its projected 2021 financial results and outlook and the Company's growth potential. 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 Luna 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 Luna's products and services to meet expectations, failure of target market to grow and expand, technological and strategic challenges, uncertainties related to the ultimate impact of the COVID-19 pandemic and those risks and uncertainties set forth in Luna's Form 10-Q for the quarter ended June 30, 2021, and Luna's other periodic reports and filings with the Securities and Exchange Commission ("SEC"). Such filings are available on the SEC's website at www.sec.gov and on Luna's website at www.lunainc.com. The statements made in this release are based on information available to Luna 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.

Luna Innovations Incorporated

Consolidated Balance Sheets

(in thousands, except share data)

 

 

 

June 30, 2021

 

December 31, 2020

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

11,970

 

 

$

15,366

 

Accounts receivable, net

 

24,605

 

 

 

24,951

 

Contract assets

 

6,857

 

 

 

7,046

 

Inventory

 

25,579

 

 

 

23,597

 

Prepaid expenses and other current assets

 

6,886

 

 

 

4,509

 

Total current assets

 

75,897

 

 

 

75,469

 

Property and equipment, net

 

3,183

 

 

 

3,308

 

Intangible assets, net

 

18,887

 

 

 

20,109

 

Goodwill

 

19,155

 

 

 

18,121

 

Long-term contract assets

 

 

 

 

471

 

Operating lease ROU asset

 

10,461

 

 

 

11,281

 

Finance lease ROU asset

 

220

 

 

 

244

 

Other assets

 

38

 

 

 

39

 

Deferred tax asset

 

1,486

 

 

 

1,960

 

Total assets

$

129,327

 

 

$

131,002

 

Liabilities and stockholders' equity

 

 

 

Liabilities:

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt obligations

$

4,167

 

 

$

4,167

 

Accounts payable

 

3,962

 

 

 

4,393

 

Accrued liabilities

 

11,171

 

 

 

12,159

 

Contract liabilities

 

6,425

 

 

 

7,095

 

Current portion of operating lease ROU liability

 

2,314

 

 

 

2,223

 

Current portion of finance lease ROU liability

 

48

 

 

 

48

 

Total current liabilities

 

28,087

 

 

 

30,085

 

Long-term debt obligations

 

13,745

 

 

 

15,817

 

Long-term portion of operating lease ROU liability

 

9,226

 

 

 

10,248

 

Long-term portion of finance lease ROU liability

 

172

 

 

 

196

 

Other long-term liabilities

 

214

 

 

 

214

 

Total liabilities

 

51,444

 

 

 

56,560

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value $0.001, 100,000,000 shares authorized, 33,511,899 and 32,724,512 shares issued,

31,772,444 and 31,024,537 shares outstanding at June 30, 2021 and December 31, 2020, respectively

 

33

 

 

 

33

 

Treasury stock at cost, 1,739,455 and 1,699,975 shares at June 30, 2021 and December 31, 2020, respectively

 

(5,209

)

 

 

(4,789

)

Additional paid-in capital

 

95,936

 

 

 

92,403

 

Accumulated deficit

 

(13,505

)

 

 

(12,957

)

Accumulated other comprehensive income/(loss)

 

628

 

 

 

(248

)

Total stockholders' equity

 

77,883

 

 

 

74,442

 

Total liabilities and stockholders' equity

$

129,327

 

 

$

131,002

 

 

Luna Innovations Incorporated

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

Revenues:

 

 

 

 

 

 

 

Lightwave

$

21,965

 

 

$

12,933

 

 

$

42,962

 

 

$

24,487

 

Luna Labs

 

5,972

 

 

 

5,643

 

 

 

11,274

 

 

 

11,230

 

Total revenues

 

27,937

 

 

 

18,576

 

 

 

54,236

 

 

 

35,717

 

Cost of revenues:

 

 

 

 

 

 

 

Lightwave

 

9,441

 

 

 

5,181

 

 

 

18,212

 

 

 

10,066

 

Luna Labs

 

4,546

 

 

 

3,878

 

 

 

8,645

 

 

 

7,770

 

Total cost of revenues

 

13,987

 

 

 

9,059

 

 

 

26,857

 

 

 

17,836

 

Gross profit

 

13,950

 

 

 

9,517

 

 

 

27,379

 

 

 

17,881

 

Operating expense:

 

 

 

 

 

 

 

Selling, general and administrative

 

13,142

 

 

 

6,202

 

 

 

24,432

 

 

 

12,579

 

Research, development and engineering

 

1,810

 

 

 

1,505

 

 

 

4,743

 

 

 

3,102

 

Total operating expense

 

14,952

 

 

 

7,707

 

 

 

29,175

 

 

 

15,681

 

Operating (loss)/income

 

(1,002

)

 

 

1,810

 

 

 

(1,796

)

 

 

2,200

 

Other (expense)/income:

 

 

 

 

 

 

 

Investment income

 

 

 

 

4

 

 

 

 

 

 

64

 

Other income/(expense)

 

 

 

 

(4

)

 

 

 

 

 

5

 

Interest expense

 

(122

)

 

 

(1

)

 

 

(265

)

 

 

(1

)

Total other (expense)/income

 

(122

)

 

 

(1

)

 

 

(265

)

 

 

68

 

(Loss)/income from continuing operations before income taxes

��

(1,124

)

 

 

1,809

 

 

 

(2,061

)

 

 

2,268

 

Income tax (benefit)/expense

 

(894

)

 

 

440

 

 

 

(1,513

)

 

 

579

 

Net (loss)/income from continuing operations

 

(230

)

 

 

1,369

 

 

 

(548

)

 

 

1,689

 

Loss from discontinued operations, net of income tax of $—

 

 

 

 

 

 

 

 

 

 

(1,436

)

Net (loss)/income

 

(230

)

 

 

1,369

 

 

 

(548

)

 

 

253

 

Preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

$

(230

)

 

$

1,369

 

 

$

(548

)

 

$

253

 

Net (loss)/income per share from continuing operations:

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

$

0.04

 

 

$

(0.02

)

 

$

0.06

 

Diluted

$

(0.01

)

 

$

0.04

 

 

$

(0.02

)

 

$

0.05

 

Net loss per share from discontinued operations:

 

 

 

 

 

 

 

Basic

$

 

 

$

 

 

$

 

 

$

(0.05

)

Diluted

$

 

 

$

 

 

$

 

 

$

(0.04

)

Net (loss)/income per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

$

0.04

 

 

$

(0.02

)

 

$

0.01

 

Diluted

$

(0.01

)

 

$

0.04

 

 

$

(0.02

)

 

$

0.01

 

Weighted average shares:

 

 

 

 

 

 

 

Basic

 

31,494,563

 

 

 

30,484,797

 

 

 

31,413,451

 

 

 

30,589,249

 

Diluted

 

33,500,801

 

 

 

32,494,950

 

 

 

33,487,109

 

 

 

32,466,122

 

 

Luna Innovations Incorporated

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Six Months Ended

June 30,

 

2021

 

2020

 

 

Cash flows (used in)/provided by operating activities

 

 

 

Net (loss)/income

$

(548

)

 

$

253

 

Adjustments to reconcile net loss to net cash (used in)/provided by operating activities

 

 

 

Depreciation and amortization

 

2,360

 

 

 

1,363

 

Share-based compensation

 

1,514

 

 

 

967

 

Bad debt expense

 

 

 

 

(26

)

Loss from discontinued operations, net of tax

 

 

 

 

1,436

 

Deferred taxes

 

475

 

 

 

(10

)

Change in assets and liabilities

 

 

 

Accounts receivable

 

(473

)

 

 

(139

)

Contract assets

 

763

 

 

 

(508

)

Inventory

 

(1,562

)

 

 

(937

)

Other current assets

 

(2,399

)

 

 

(404

)

Accounts payable and accrued expenses

 

(2,185

)

 

 

(1,286

)

Contract liabilities

 

(826

)

 

 

(520

)

Net cash (used in)/provided by operating activities

 

(2,881

)

 

 

193

 

Cash flows (used in)/provided by investing activities

 

 

 

Acquisition of property and equipment

 

(551

)

 

 

(111

)

Intangible property costs

 

(141

)

 

 

(192

)

Proceeds from sale of discontinued operations

 

 

 

 

600

 

Net cash (used in)/provided by investing activities

 

(692

)

 

 

298

 

Cash flows (used in)/provided by financing activities

 

 

 

Payments on finance lease obligations

 

(24

)

 

 

(26

)

Payments of debt obligations

 

(2,072

)

 

 

 

Repurchase of common stock

 

(420

)

 

 

(328

)

Proceeds from term loan

 

530

 

 

 

 

Proceeds from the exercise of options and warrants

 

1,490

 

 

 

1,363

 

Net cash (used in)/provided by financing activities

 

(496

)

 

 

1,009

 

Effect of exchange rate changes on cash and cash equivalents

 

(4,069

)

 

 

1,500

 

Effect of exchange rate changes on cash and cash equivalents

 

673

 

 

 

 

Cash and cash equivalents-beginning of period

 

15,366

 

 

 

25,006

 

Cash and cash equivalents-end of period

$

11,970

 

 

$

26,506

 

 

Luna Innovations Incorporated

Reconciliation of Net (Loss)/Income to EBITDA and Adjusted EBITDA

(in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

Net (loss)/income

$

(230

)

 

$

1,369

 

 

$

(548

)

 

$

253

 

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

(1,436

)

Net (loss)/income from continuing operations

 

(230

)

 

 

1,369

 

 

 

(548

)

 

 

1,689

 

Interest expense

 

122

 

 

 

1

 

 

 

265

 

 

 

1

 

Investment income

 

 

 

 

(4

)

 

 

 

 

 

(64

)

Income tax (benefit)/expense

 

(894

)

 

 

440

 

 

 

(1,513

)

 

 

579

 

Depreciation and amortization

 

1,129

 

 

 

684

 

 

 

2,360

 

 

 

1,363

 

EBITDA

 

127

 

 

 

2,490

 

 

 

564

 

 

 

3,568

 

Share-based compensation

 

857

 

 

 

465

 

 

 

1,514

 

 

 

967

 

Integration and transaction expense

 

991

 

 

 

 

 

 

1,877

 

 

 

 

Amortization of inventory step-up

 

168

 

 

 

 

 

 

336

 

 

 

 

Adjusted EBITDA

$

2,143

 

 

$

2,955

 

 

$

4,291

 

 

$

4,535

 

Luna Innovations Incorporated

Reconciliation of Net (Loss)/Income to Adjusted EPS

(in thousands, except per share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

Net (loss)/income

$

(230

)

 

 

1,369

 

 

$

(548

)

 

 

253

 

Loss from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

(1,436

)

Net (loss)/income from continuing operations

 

(230

)

 

 

1,369

 

 

 

(548

)

 

 

1,689

 

Share-based compensation

 

857

 

 

 

465

 

 

 

1,514

 

 

 

967

 

Integration and deal expense

 

991

 

 

 

 

 

 

1,877

 

 

 

 

Amortization of intangible assets

 

773

 

 

 

410

 

 

 

1,616

 

 

 

843

 

Amortization of inventory step-up

 

168

 

 

 

 

 

 

336

 

 

 

 

Income tax effect on adjustments

 

(697

)

 

 

(219

)

 

 

(1,336

)

 

 

(453

)

Adjusted income from continuing operations

$

1,862

 

 

$

2,025

 

 

$

3,459

 

 

$

3,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

$

0.06

 

 

$

0.06

 

 

$

0.10

 

 

$

0.09

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares (in thousands):

��

 

 

 

 

 

 

Diluted

 

33,501

 

 

 

32,495

 

 

 

33,487

 

 

 

32,466