Good afternoon, everyone, and thanks for taking the time to join our call. I'm excited to be with you today announcing record revenue for the quarter, and significant progress in the integration of our largest acquisition OptaSense. I shared with you last quarter, this was going to be a year of focus blocking and tackling for Luna. Essentially an inflection point, where we are building on all the processes and systems we put in place throughout 2020 and which will allow us to scale well into the future.
In addition, we will continue to invest in our business through this year and into 2022, because we see an abundance of opportunities for strong and rapid growth. In order to bring discipline to evaluating the vastness of these opportunities, we created a new role the Senior Vice President and Head of Strategy.
As you may have seen, at the end of Q2 we announced that Bhaskar Banerjee joined the Luna team adding to our best strength in support of and maximization of our profitable growth, both organically and through acquisition.
We will continue to be an acquisitive company, sharply focused on building our capability and expertise in fiber. And of course, we will only do those deals that make sense from both a financial and cultural perspective.
One of our key priorities will always be the prudent and thoughtful deployment of capital. Last quarter we made leadership changes in sales, operations and human resources and I believe that incrementally adding Bhaskar to the team positions us well, with the leadership we need to execute value creating strategic moves. It was critical that we get the right people into the right positions so that we are prepared to adjust quickly to changing market conditions and customer needs, as well as innovating with speed. A few weeks ago, I brought our leadership team together in person for the first time, and I had a couple of goals in mind for this meeting.
First, I felt it was important for us to spend time together to begin to build a foundation of collaboration and trust.
Second, we began the work on our updated strategic plan, laying out the landscape ahead of us and beginning to categorize what we see as near, medium and long term opportunities. I'm pleased to say the meeting was a huge success.
As I looked around the room, I was grateful for the amount of talent we added to our management team is such a short period of time. I now believe I have the right people around the table. I also inspired by the impact our products have on our customers and society. Whether it's making bridges and damn safer or 5G networks more reliable, or securing key government and private industry assets, Luna’s products help make the world a better and safer place. Luna has interesting options, and I want to give you some visibility into how we think about them. We sit in rarified air, with the applications of our fiber technology nearly limitless.
While this is incredibly exciting for both near and long term growth, it also requires careful planning. It'd be easy to get distracted by trying to chase every possible application of our technology.
So ironically, we're being challenged in a very good way, to be extremely thoughtful about where we can achieve near term success with existing resources, while strategically planning for medium and longer term market expansion. Thankfully, we have a strong team and excellent support and guidance from our Board, to help us navigate this balancing act. Luna is extremely well positioned to take advantage of the growing needs across multiple industries for solutions built on the benefit of fiber sensing technology.
We are the market leader with thousands of systems deployed and operating in the field today.
Our sensing solutions are already deployed globally to monitor critical infrastructure like bridges, tunnels, dams, roads, railway, and pipelines, where we give operators and municipalities’ access to critical information regarding the health and status of their assets. We stand ready with time proven solutions to improve the safety and security of infrastructure as new market drivers emerge. The announcement last week by the U.S. Senate of $1.2 trillion infrastructure bill is a good example of one such potential driver. Details need to be addressed before any funds tied to that bill, make their weight Luna, but I wanted to give you all a flavor for our strong position in this space, and our readiness to take advantage of the changing trends. One recent and relevant example comes to mind. Last month we closed a sale for the use of our OptaSensor and fiber optics sensors to early warning system for a large dam in South America. I use this example because there are thousands of similar dams globally that could also benefit from our technology. And as you've heard me say before, we're just getting started.
We will focus on resources where the most value can be created in the short term, while strategically planning for the long term. Obviously, customer input and collaboration is key to this. And we know from experience of this approach, leads to the most robust success.
Another example is where we collaborated with Lockheed Martin using our OBR 6200. In this case we solved critical issues, which ultimately led to Luna being the sole source supplier of measurement technology for the F-35. I want to share a few more thoughts about our long term prospects and some trends that we're seeing, as well as the impact of COVID before I get into the specifics of the results for the second quarter.
As we've discussed before, Luna does have some seasonality in its business, typically earning from 44% to 46% of full year revenue in the first half, and the first half of 2021 was no different. We delivered 44% at the midpoint of our guidance range and are on track for the year, which is why we are comfortable reaffirming the March 2021 guidance range at this time. And as a reminder, that guidance is total revenue of $122 million to $127 million and adjusted EBITDA of $16 million to $19 million.
We continue to see some very good strength across the totality of our sales pipeline. I mentioned last quarter, some changes to our organizational structure, including several promotions within the team to create tighter management of sales across the portfolio, allowing us to capture the potential in the pipeline. Certainly, we are still seeing impacts from the ongoing pandemic, which affects timing of sales cycles, as well as certain parts of our supply chain.
In fact, I want to highlight something that we have not seen previously with respect to both our supply chain and to our sales cycles. This affects our business in several ways.
First, it makes it more difficult for us to get the components we need to assemble our products and shift to customers.
Second, it affects our customers’ ability to take deliveries of our products as they're waiting on delivery from other parts of their supply chain.
Third, the more general disruptions that come from COVID like travel limitations and can delay our project work in the field, which in turn delays our ability to recognize that revenue. And lastly, I will note that as many have felt in the first half of 2021, these factors that have a particularly large impact on our sales operations in Asia throughout the first part of the year. This has not to-date materially affected our ability to deliver product to customers on time.
However, we are getting indications that some parts which we would normally receive in a number of days are taking longer.
We continue to keep a close eye on the supply chain and any potential impact on our capacity to manufacture. We could potentially be affected by this if timing of deliveries do not revert back to a more typical delivery pattern.
Now, I'd like to move on to some of the financial highlights for the second quarter.
For the second quarter of 2021, total revenues were up 50% to $27.9 million compared to the prior year's quarter.
For the first half revenues were up 52% versus the first half of last year.
I think it's important to notice, if we look at growth in terms of apples-to-apples or as if we owned OptaSense at the beginning of 2020, organic growth for Q2 was over 20% and the first half of 2021 was in the mid-teens. The Lightwave segment had an increase of 70% year-over-year to $22 million in total revenues. Again, if we looked at growth on an apples-to-apples, Lightwave organic revenue for Q2 was up nearly 30%.Luna Lab’s revenue was $6 million up 6% versus Q2 of 2020. We reported an operating loss of $1 million for Q2, 2021 versus operating income of $1.8 million for Q2, 2020. The largest driver of this year-over-year decrease in operating income was $1.5 million of integration, transaction and amortization of intangible asset costs, relating to our recent completed acquisition, as well as continuing portfolio activities. The decrease is also partially due to product mix as we saw stronger levels of sales this quarter in certain products that carry lower margin. Reflecting the same dynamic I just discussed for adjusted EBITDA, we delivered $2.1 million in Q2 versus $3 million in the prior year period. This resulted in adjusted earnings per share figure of $0.06 for Q2, 2021 compared with $0.06 for Q2 in the prior year period.
Now, let me discuss Lightwave in more detail.
As a reminder, our Lightwave solutions focus on two areas: sensing and communications testing.
For the second quarter 2021, the revenue growth I just mentioned was driven by both, the acquisition of OptaSense and strong commercial sales in legacy Lightwave’s comms testing.
Let's dig a little deeper into the sensing segment, which you may recall is a segment where we use the fiber as the physical sensor to create smart, materials and structures. Revenues grew by 63% versus Q2 last year, driven by both the acquisition of the OptaSense product lines, as well as legacy Luna products.
As a reminder, we added the OptaSense distributed acoustic sensing or DAS technology to gain access to fully distributed measurement capabilities over long range applications to augment our already industry leading line of fiber optic sensing products. The addition of long range distributed capability to our offerings establishes Luna as new global market leader in fiber optic sensing with diversified geographies and applications.
While on the topic of OptaSense, we hit important integration milestones in Q2. We successfully completed the integration of the functional support elements, IT, HR, Finance, that were previously handled under our transition services agreement with Connecticut.
We have more integration work in front of us as we look to maximize our growth potential, but the heavy lifting of integrating the back office function is now largely behind us. Staying with our sensing vertical, we made important progress on several strategic growth areas. We saw a significant increase in oilfield activity with campaigns for major North American operators and an extended seismic mapping job in the North Sea.
In addition, bidding activity in Canada and the Middle East is increasing. Despite challenges caused by the pandemic, we have delivered a number of major contracts to South American customers for infrastructure monitoring, further positioning Luna as a trusted supplier and recognized world leader within these markets. We made progress in expanding into the new markets, we’re tracking gain in the telecoms industry, following an extended period of investigation, a major U.S. cloud services provider chose to invest in Luna’s sensing solution to help monitor their fiber optic networks. And we launched the 6th Generation of our acquisition and interpretation platform for linear assets like borders and pipelines. In this release we feature a simplified layout and display, making it easier to use.
We also included an auto tuning capability using machine learning, which helps to accelerate setup up time.
Now switching to Communications Test Vertical. These product lines grew strongly, 79% in Q2 versus the prior year period.
For some additional clarity, it's important to know that the RIO Laser business acquired through the acquisition of OptaSense is included in our comms test results. Without OptaSense, our legacy Luna comms test business grew more than 40% in Q2 versus last year.
With the addition of the RIO Laser products, and the general photonics products we added in early 2019, this business is now 50% test and measurement for communication devices, and 50%t optical component in laser modules for a variety of photonics applications such as medical devices, sensing systems and LiDAR. If we look at the legacy part of comms testing, our core products the OVA and OBR grew nearly 100% on a year-over-year basis, driven by a continuation of the strong commercial environment we discussed in Q1 and the continuation of deliveries of our newest product in this category, the OBR 6200.
You'll remember that last year we announced our partnership with Lockheed Martin and their order for over 100 units in Q4, 2020.
Our deliveries to Lockheed have proceeded without interruption. In general, comms testing drove significant overall improvement in commercial sales over last year with multiple system sales to large corporate customers. And now let's move on to a discussion of Luna Labs, where as a reminder we leveraged third party contract research to build a portfolio of technologies. These technologies which are commercialized through direct sales, distributors or license agreements are outside our core strategic fiber-optic offerings.
In terms of the second quarter, Luna Labs saw many positive business indicators as employees returned full time to the office. Government customers were able to travel again and trade shows resumed in-person meetings.
For Q2 2021 Luna Labs reported $6 million in revenue, a 6% increase over Q2, 2020. Returning to in-person trade shows, allows us to reconnect with customers and demonstrate some of the new products we have developed recently.
For example, in our existing corrosion monitoring product line, we made progress expanding aerospace sensors in the automotive markets. We recently delivered and order a Jaguar, Land Rover in support of a two year, 400,000 kilometer test across North America. Jaguar, Land Rover is using the Luna Lab sensors to forecast new material behavior as we investigate next generation Lightwave materials.
Before I turn it over to Gene for a deeper dive into Q2 results, I want to make a few comments on the continuing effects of the global pandemic, building on the comment I made earlier. Luna’s operations have only been slightly affected by COVID-19 pandemic thus far, in supply chain and in sales cycles.
For supply chain we've largely been able to mitigate risk for electronic parts by building in more safety stock and working closely with our supply partners to ensure delivery.
Going forward, we are taking steps to eliminate hard to get parts and replacing those in our designs with parts we know, we can more readily source. An industry prediction suggests that we should see some easing of the situation in Q4.
While we don't currently predict the situation will adversely affect our results, we want to be clear that we do rely on a steady supply of electronic parts and boards that are increasingly difficult to source.
Finally, with regard to the timing of sales cycles, we did see some impact from the pandemic this quarter as certain geographic regions have experienced limited travel and in person meetings. These have only been timing issues, and we have seen all effective sales ultimately close, but I did want to mention it, especially in light of recent news about the variant. In summary, I'm extremely pleased with the progress so far this year. We'll continue to focus on fundamental blocking and tackling, as well as building for the long term. I'm incredibly grateful to the Luna team for their focused work and continue to be confident that we have the right strategy to capitalize on opportunities in our growing markets. I'll now hand the call over to Gene, for more of the financial details on the quarter. Gene.