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Press release content from Business Wire. The AP news staff was not involved in its creation.

Luna Innovations Reports Third-Quarter 2021 Results

November 15, 2021 GMT

ROANOKE, Va.--(BUSINESS WIRE)--Nov 15, 2021--

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

“Q3 was a record quarter for customer demand of our products, as we realized the highest level of bookings we’ve ever had,” said Scott Graeff, President and Chief Executive Officer of Luna. “The largest backlog in our history is the result of record bookings, the increased impact of COVID and industry-wide supply chain challenges which have slowed our ability to deliver products. As a result, revenue for the year will be lighter than what we could have delivered. We believe that this is a temporary situation and remain committed to Luna’s strategy. We continue to see vast opportunities for Luna in fiber optic technologies and are pleased to take the pivotal step in focusing on fiber with our transition of Luna Labs to discontinued operations. We have evaluated a number of opportunities and look forward to sharing Luna’s meaningful achievements over the coming months.”

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Third-Quarter Fiscal 2021 Financial Summary

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

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Three Months Ended September 30,

 

Change

(in thousands, except share and per share data)

 

2021

 

2020

 

 

Revenues

 

$

20,329

 

 

$

15,350

 

 

32

%

 

 

 

 

 

 

 

Gross profit

 

12,584

 

 

9,632

 

 

31

%

Gross margin

 

62

%

 

63

%

 

 

 

 

 

 

 

 

Operating expense

 

12,594

 

 

8,420

 

 

50

%

Operating (loss)/income

 

(10)

 

 

1,212

 

 

 

 

Operating margin

 

%

 

8

%

 

 

 

 

 

 

 

 

 

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

 

(334)

 

 

1,096

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss)/income from continuing operations

 

$

(344)

 

 

$

2,308

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net of income tax of $235 and $247

 

699

 

 

794

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

355

 

 

$

3,102

 

 

(89)

%

 

 

 

 

 

 

 

 

Earnings per diluted share (EPS)

 

$

0.01

 

 

$

0.10

 

 

(90)

%

Adjusted EPS

 

$

0.03

 

 

$

0.11

 

 

(73)

%

Diluted weighted average shares outstanding

 

33,780,714

 

 

32,411,086

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

2,110

 

 

$

3,144

 

 

(33)

%

A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable figures under generally accepted accounting principles (“GAAP”) can be found in the schedules included in this release.

Revenues for the three months ended September 30, 2021 increased compared to the prior-year period, primarily due to revenue generated by the businesses we have recently acquired over the last year.

Gross margin decreased to 62% for the three months ended September 30, 2021, compared to 63% for the three months ended September 30, 2020, driven primarily by product mix. Operating loss and margin declined to $10 thousand and less than 1% of total revenues, respectively, for the three months ended September 30, 2021, compared to $1.2 million and 8% of total revenues, respectively, for the three months ended September 30, 2020. The decrease in operating income was primarily due to an increase in operating expenses and amortization related to our recent acquisitions.

Net income was $0.4 million, or $0.01 per fully diluted share, for the three months ended September 30, 2021, compared to net income of $3.1 million, or $0.10 per fully diluted share, for the three months ended September 30, 2020. Adjusted EPS was $0.03 for the three months ended September 30, 2021 compared to $0.11 for the three months ended September 30, 2020.

Adjusted EBITDA was $2.1 million for three months ended September 30, 2021, compared to $3.1 million for the three months ended September 30, 2020. The decrease was driven by lower income from continuing operations.

Nine Months Ended Fiscal 2021 Financial Summary

Highlights of the financial results for the nine months ended September 30, 2021 are:

 

 

Nine months ended September 30,

 

Change

(in thousands, except share and per share data)

 

2021

 

2020

 

 

Revenues

 

$

63,291

 

 

$

39,837

 

 

59

%

 

 

 

 

 

 

 

Gross profit

 

37,436

 

 

24,126

 

 

55

%

Gross margin

 

59

%

 

61

%

 

 

 

 

 

 

 

 

Operating expense

 

41,061

 

 

23,252

 

 

77

%

Operating (loss)/income

 

(3,625)

 

 

874

 

 

 

 

Operating margin

 

(6)

%

 

2

%

 

 

 

 

 

 

 

 

 

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

 

1,061

 

 

1,012

 

 

5

%

 

 

 

 

 

 

 

 

Net (loss)/income from continuing operations

 

$

(2,564)

 

 

$

1,886

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net of income tax of $381 and $209

 

2,371

 

 

1,469

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss)/income

 

$

(193)

 

 

$

3,355

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per diluted share (EPS)

 

$

(0.01)

 

 

$

0.10

 

 

 

 

Adjusted EPS

 

$

0.08

 

 

$

0.14

 

 

(43)

%

Diluted weighted average shares outstanding

 

33,585,973

 

 

32,478,625

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

4,461

 

 

$

4,990

 

 

(11)

%

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

Revenues for the nine months ended September 30, 2021 increased compared to the prior-year period, primarily due to our recent acquisitions.

Gross margin of 59% for the nine months ended September 30, 2021 was down compared to 61% for the nine months ended September 30, 2020 due to product mix. Operating loss and margin declined to $3.6 million and (6)% of total revenues, respectively, for the nine months ended September 30, 2021, compared to $0.9 million and 2% of total revenues, respectively, for the nine months ended September 30, 2020. The decrease in operating income was primarily due to $2.1 million of integration and transaction costs, as well as $1.6 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 nine months ended September 30, 2021, compared to a net income of $3.4 million, or $0.10 per fully diluted share, for the nine months ended September 30, 2020. Adjusted EPS was $0.08 for the nine months ended September 30, 2021, compared to $0.14 for the nine months ended September 30, 2020.

Adjusted EBITDA was $4.5 million for the nine months ended September 30, 2021, compared to $5.0 million for the nine months ended September 30, 2020.

2021 Full-Year Outlook

Luna is revising guidance to reflect the reclassification of Luna Labs to discontinued operations and COVID-19 pandemic related issues:

  • Total revenue of $85 million to $88 million
  • Adjusted EBITDA of $6 million to $8 million

Adjusted EBITDA is a non-GAAP measure. Luna is not providing an outlook for net income/(loss), which is the most directly comparable 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 and Adjusted EPS, which exclude certain charges and income 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 nine months ended September 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 6088397. 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 a multitude of industries. 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, the Company’s growth potential, the resolution of backlog and supply chain challenges and the potential sale of Luna Labs. 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 September 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)

 

 

September 30, 2021

 

December 31, 2020

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

14,755

 

 

$

15,366

 

Accounts receivable, net

19,557

 

 

21,928

 

Contract assets

2,883

 

 

4,139

 

Inventory

25,350

 

 

23,062

 

Prepaid expenses and other current assets

6,213

 

 

4,433

 

Assets held for sale

13,855

 

 

6,541

 

Total current assets

82,613

 

 

75,469

 

Property and equipment, net

2,820

 

 

2,917

 

Intangible assets, net

17,819

 

 

19,994

 

Goodwill

18,979

 

 

18,121

 

Operating lease right-of-use asset

5,497

 

 

5,984

 

Other non-current assets

246

 

 

369

 

Deferred tax asset

1,707

 

 

1,689

 

Non-current assets held for sale

 

 

6,459

 

Total assets

$

129,681

 

 

$

131,002

 

Liabilities and stockholders’ equity

 

 

 

Liabilities:

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt obligations

$

4,167

 

 

$

4,167

 

Accounts payable

2,585

 

 

2,852

 

Accrued and other current liabilities

10,826

 

 

10,773

 

Contract liabilities

4,967

 

 

6,698

 

Current portion of operating lease liability

2,020

 

 

1,876

 

Liabilities associated with assets held for sale

9,091

 

 

3,719

 

Total current liabilities

33,656

 

 

30,085

 

Long-term debt obligations

12,709

 

 

15,817

 

Long-term portion of operating lease liability

4,073

 

 

5,034

 

Other long-term liabilities

374

 

 

410

 

Non-current liabilities associated with assets held for sale

 

 

5,214

 

Total liabilities

50,812

 

 

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, 31,961,907 and 31,024,537 shares outstanding at September 30, 2021 and December 31, 2020, respectively

34

 

 

33

 

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

(5,209)

 

 

(4,789)

 

Additional paid-in capital

97,238

 

 

92,403

 

Accumulated deficit

(13,150)

 

 

(12,957)

 

Accumulated other comprehensive loss

(44)

 

 

(248)

 

Total stockholders’ equity

78,869

 

 

74,442

 

Total liabilities and stockholders’ equity

$

129,681

 

 

$

131,002

 

 

Luna Innovations Incorporated

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

Revenues

$

20,329

 

 

$

15,350

 

 

$

63,291

 

 

$

39,837

 

Cost of revenues

7,745

 

 

5,718

 

 

25,855

 

 

15,711

 

Gross profit

12,584

 

 

9,632

 

 

37,436

 

 

24,126

 

Operating expense:

 

 

 

 

 

 

 

Selling, general and administrative

9,674

 

 

6,229

 

 

33,414

 

 

17,959

 

Research, development and engineering

2,920

 

 

1,615

 

 

7,647

 

 

4,717

 

Loss on sale of property and equipment

 

 

576

 

 

 

 

576

 

Total operating expense

12,594

 

 

8,420

 

 

41,061

 

 

23,252

 

Operating (loss)/income

(10)

 

 

1,212

 

 

(3,625)

 

 

874

 

Other (expense)/income:

 

 

 

 

 

 

 

Investment income

 

 

1

 

 

 

 

65

 

Other income

 

 

13

 

 

 

 

19

 

Interest expense

(110)

 

 

(1)

 

 

(375)

 

 

(2)

 

Total other (expense)/income

(110)

 

 

13

 

 

(375)

 

 

82

 

(Loss)/income from continuing operations before income taxes

(120)

 

 

1,225

 

 

(4,000)

 

 

956

 

Income tax expense/(benefit)

224

 

 

(1,083)

 

 

(1,436)

 

 

(930)

 

Net (loss)/income from continuing operations

(344)

 

 

2,308

 

 

(2,564)

 

 

1,886

 

Income from discontinued operations, net of income tax of $235, $246, $381, and $673

699

 

 

794

 

 

2,371

 

 

1,469

 

Net income/(loss)

$

355

 

 

$

3,102

 

 

$

(193)

 

 

$

3,355

 

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

 

 

 

 

 

 

 

Basic

$

(0.01)

 

 

$

0.07

 

 

$

(0.08)

 

 

$

0.06

 

Diluted

$

(0.01)

 

 

$

0.07

 

 

$

(0.08)

 

 

$

0.06

 

Net income per share from discontinued operations:

 

 

 

 

 

 

 

Basic

$

0.02

 

 

$

0.03

 

 

$

0.08

 

 

$

0.05

 

Diluted

$

0.02

 

 

$

0.02

 

 

$

0.07

 

 

$

0.05

 

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

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

0.10

 

 

$

(0.01)

 

 

$

0.11

 

Diluted

$

0.01

 

 

$

0.10

 

 

$

(0.01)

 

 

$

0.10

 

Weighted average shares:

 

 

 

 

 

 

 

Basic

31,944,869

 

 

30,809,896

 

 

31,553,998

 

 

30,593,954

 

Diluted

33,780,714

 

 

32,411,086

 

 

33,585,973

 

 

32,478,625

 

 

Luna Innovations Incorporated

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

Nine Months Ended September 30,

 

2021

 

2020

 

 

Cash flows provided by operating activities

 

 

 

Net (loss)/income

$

(193)

 

 

$

3,355

 

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

 

 

 

Depreciation and amortization

3,523

 

 

2,126

 

Share-based compensation

2,230

 

 

1,538

 

Bad debt expense

262

 

 

147

 

Loss on sale of property and equipment

 

 

576

 

Loss from discontinued operations, net of tax

 

 

1,436

 

Deferred taxes

(23)

 

 

(313)

 

Change in assets and liabilities

 

 

 

Accounts receivable

220

 

 

(2,131)

 

Contract assets

837

 

 

(1,589)

 

Inventory

(1,906)

 

 

(1,419)

 

Other current assets

(1,752)

 

 

(1,982)

 

Accounts payable and accrued expenses

(1,681)

 

 

(1,481)

 

Contract liabilities

(287)

 

 

(166)

 

Net cash provided by operating activities

1,230

 

 

97

 

Cash flows (used in)/provided by investing activities

 

 

 

Acquisition of property and equipment

(943)

 

 

(422)

 

Intangible property costs

(215)

 

 

(291)

 

Proceeds from sale of property and equipment

 

 

403

 

Proceeds from sale of discontinued operations

 

 

600

 

Net cash (used in)/provided by investing activities

(1,158)

 

 

290

 

Cash flows (used in)/provided by financing activities

 

 

 

Payments on finance lease obligations

(36)

 

 

(39)

 

Payments of debt obligations

(3,110)

 

 

 

Repurchase of common stock

(420)

 

 

(329)

 

Proceeds from ESPP

530

 

 

 

Proceeds from the exercise of options and warrants

2,076

 

 

1,397

 

Net cash (used in)/provided by financing activities

(960)

 

 

1,029

 

Effect of exchange rate changes on cash and cash equivalents

277

 

 

 

Net (decrease)/increase in cash and cash equivalents

(611)

 

 

1,416

 

Cash and cash equivalents-beginning of period

15,366

 

 

25,006

 

Cash and cash equivalents-end of period

$

14,755

 

 

$

26,422

 

 

Luna Innovations Incorporated

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

(in thousands)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

Net income/(loss)

$

355

 

 

$

3,102

 

 

$

(193)

 

 

$

3,355

 

Income from discontinued operations, net of tax

699

 

 

794

 

 

2,371

 

 

1,469

 

Net (loss)/income from continuing operations

(344)

 

 

2,308

 

 

(2,564)

 

 

1,886

 

Interest expense

110

 

 

1

 

 

375

 

 

2

 

Investment income

 

 

(1)

 

 

 

 

(65)

 

Income tax expense/(benefit)

224

 

 

(1,083)

 

 

(1,436)

 

 

(930)

 

Depreciation and amortization

1,131

 

 

709

 

 

3,440

 

 

1,979

 

EBITDA

1,121

 

 

1,934

 

 

(185)

 

 

2,872

 

Share-based compensation

689

 

 

542

 

 

2,133

 

 

1,450

 

Integration and transaction expense

196

 

 

 

 

2,073

 

 

 

Loss on sale of property and moving related expenses

 

 

668

 

 

 

 

668

 

Amortization of inventory step-up

104

 

 

 

 

440

 

 

 

Adjusted EBITDA

$

2,110

 

 

$

3,144

 

 

$

4,461

 

 

$

4,990

 

 

Luna Innovations Incorporated

Reconciliation of Net Income/(Loss) to Adjusted EPS

(in thousands, except per share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

Net income/(loss)

$

355

 

 

$

3,102

 

 

$

(193)

 

 

$

3,355

 

Income from discontinued operations, net of tax

699

 

 

794

 

 

2,371

 

 

1,469

 

Net (loss)/income from continuing operations

(344)

 

 

2,308

 

 

(2,564)

 

 

1,886

 

Share-based compensation

689

 

 

542

 

 

2,133

 

 

1,450

 

Integration and deal expense

196

 

 

 

 

2,073

 

 

 

Amortization of intangible assets

761

 

 

424

 

 

2,353

 

 

1,236

 

Amortization of inventory step-up

104

 

 

 

 

440

 

 

 

Loss on sale of property and moving related expenses

 

 

668

 

 

 

 

668

 

Income tax effect on adjustments

(438)

 

 

(409)

 

 

(1,750)

 

 

(839)

 

Adjusted income from continuing operations

$

968

 

 

$

3,533

 

 

$

2,685

 

 

$

4,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

$

0.03

 

 

$

0.11

 

 

$

0.08

 

 

$

0.14

 

 

 

 

 

 

 

 

 

Adjusted weighted average shares (in thousands):

 

 

 

 

 

 

 

Diluted

33,781

 

 

32,411

 

 

33,586

 

 

32,479

 

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211115006241/en/

CONTACT: Investor:

Allison Woody

Phone: 540-769-8465

Email:IR@lunainc.com

KEYWORD: UNITED STATES NORTH AMERICA VIRGINIA

INDUSTRY KEYWORD: NANOTECHNOLOGY OTHER TECHNOLOGY TECHNOLOGY TELECOMMUNICATIONS SOFTWARE

SOURCE: Luna Innovations Incorporated

Copyright Business Wire 2021.

PUB: 11/15/2021 04:05 PM/DISC: 11/15/2021 04:06 PM

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