Q3 Highlights
- Total revenue of $30.7 million, up 5% year over
year
- Gross margin of 57%, compared to 58% for the prior
year
- Net income of $0.5 million, compared to net income of $1.2
million for the prior year
- Adjusted EBITDA of $4.2 million, compared to $4.5 million
for the prior year
- Adjusted EPS of $0.07, compared to $0.09 for the prior
year
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, 2023.
"We delivered solid performance this quarter in spite of
continued macroeconomic headwinds," said Scott Graeff, President
and Chief Executive Officer of Luna. "We realized multiple
significant wins in our Sensing business, providing further proof
of the breadth of applications and abundance of opportunities for
our fiber sensing solutions. We also recognized a particularly
strong showing from our Communications Test business, where we saw
significant increase in revenue after realizing moderate recovery
from the headwinds this business faced last quarter.”
Third Quarter Fiscal 2023 Financial
Summary
Highlights of the financial results for the three months ended
September 30, 2023 are:
Three Months Ended September
30,
Change
(in thousands, except share and per share
data)
2023
2022
Revenue
$
30,703
$
29,153
5
%
Gross profit
17,629
16,919
4
%
Gross margin
57
%
58
%
Operating expense
16,477
15,441
7
%
Operating income
1,152
1,478
Operating margin
4
%
5
%
Other expense, net and income tax
expense
(691
)
(310
)
Net income from continuing operations
$
461
$
1,168
Income from discontinued operations, net
of tax of $— and $(78)
—
28
Net income
$
461
$
1,196
Earnings per diluted share (EPS)
$
0.01
$
0.04
Adjusted EPS
$
0.07
$
0.09
Diluted weighted average shares
outstanding
35,218,547
34,104,850
Adjusted EBITDA
$
4,172
$
4,544
(8
)%
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.
Revenue for the three months ended September 30, 2023 increased
5% compared to the prior-year period.
Gross margin was 57% for the three months ended September 30,
2023, compared to 58% for the three months ended September 30,
2022, driven primarily by product mix. Operating income and margin
were $1.2 million and 4% of total revenue, respectively, for the
three months ended September 30, 2023, compared to an operating
income of $1.5 million and 5% of total revenue, respectively, for
the three months ended September 30, 2022.
Net income was $0.5 million, or $0.01 per fully diluted share,
for the three months ended September 30, 2023, compared to net
income of $1.2 million, or $0.04 per fully diluted share, for the
three months ended September 30, 2022. Adjusted EPS was $0.07 for
the three months ended September 30, 2023 compared to $0.09 for the
three months ended September 30, 2022.
Adjusted EBITDA was $4.2 million for three months ended
September 30, 2023, compared to $4.5 million for the three months
ended September 30, 2022.
Nine Months Ended Fiscal 2023 Financial
Summary
Highlights of the financial results for the nine months ended
September 30, 2023 are:
Nine Months Ended September
30,
Change
(in thousands, except share and per share
data)
2023
2022
Revenue
$
84,912
$
77,795
9
%
Gross profit
49,467
47,162
5
%
Gross margin
58
%
61
%
Operating expense
50,661
50,510
—
%
Operating loss
(1,194
)
(3,348
)
Operating margin
(1
)%
(4
)%
Other expense, net and income tax
benefit
(745
)
231
Net loss from continuing operations
$
(1,939
)
$
(3,117
)
Net (loss)/income from discontinued
operations, net of income taxes of $(346) and $3,205
(1,038
)
11,543
Net (loss)/income
$
(2,977
)
$
8,426
(Loss)/earnings per diluted share
(EPS)
$
(0.09
)
$
0.26
Adjusted EPS
$
0.11
$
0.12
(8
)%
Diluted weighted average shares
outstanding
33,631,654
32,492,276
Adjusted EBITDA
$
7,759
$
7,450
4
%
A reconciliation of Adjusted EPS and Adjusted EBITDA to the
nearest comparable GAAP figures can be found in the schedules
included in this release.
Revenue for the nine months ended September 30, 2023 increased
9% compared to the prior-year period.
Gross profit of $49.5 million for the nine months ended
September 30, 2023 increased from $47.2 million for the nine months
ended September 30, 2022 primarily due to higher sales. Operating
loss and margin improved to $1.2 million and 1% of total revenue,
respectively, for the nine months ended September 30, 2023,
compared to $3.3 million and 4% of total revenue, respectively, for
the nine months ended September 30, 2022.
Net loss was $3.0 million, or $0.09 per fully diluted share, for
the nine months ended September 30, 2023, compared to a net income
of $8.4 million, or $0.26 per fully diluted share, for the nine
months ended September 30, 2022, due to the gain on sale of Luna
Labs. Adjusted EPS was $0.11 for the nine months ended September
30, 2023, compared to $0.12 for the nine months ended September 30,
2022.
Adjusted EBITDA was $7.8 million for the nine months ended
September 30, 2023, compared to $7.5 million for the nine months
ended September 30, 2022.
Q3 and Recent Business
Highlights
- Named George Gomez-Quintero as Chief Financial Officer
- Awarded a multi-year service contract for system deployed on
the largest fiber-optic monitoring solution ever installed
- Secured multiple sales of seismic monitoring DAS instruments to
American seismic labs and the U.S. government
- Secured $1.5M+ in new orders for DAS and DTS systems for
pipeline monitoring from the largest energy company in the UAE
- Renewed global supply partnership agreement for infrastructure
monitoring with one of the world's largest multinational
conglomerates
- Successfully deployed fiber optic-sensing based traffic
monitoring for the Utah Department of Transportation
2023 Full-Year Outlook
Luna is updating the 2023 revenue outlook and maintaining the
adjusted EBITDA outlook:
- Total revenue of $120 million to $125 million for the full year
2023
- Adjusted EBITDA of $14 million to $18 million for the full year
2023
Luna is not providing an outlook for net income, 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 are
non-GAAP financial measures. Adjusted EBITDA and Adjusted EPS
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 8:30 am (ET) today, November 14, 2023, to
discuss its financial results for the three and nine months ended
September 30, 2023. 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 1.800.715.9871 .and the international dial-in
number is.1.646.307.1963. Participants should ask to join the Luna
Innovations Incorporated conference call, conference ID 6862329,
and are advised to dial in at least fifteen minutes prior to the
call. A replay of the conference call will be available 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 full year 2023
financial results and outlook, and the Company's ability to secure
additional significant wins. 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 macroeconomic conditions and those risks and
uncertainties set forth in Luna’s Form 10-Q for the quarter ended
September 30, 2023, 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 (Unaudited) (in
thousands, except share data)
September 30, 2023
December 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
6,028
$
6,024
Accounts receivable, net
39,304
33,249
Contract assets
7,324
7,691
Inventory
43,318
36,582
Prepaid expenses and other current
assets
4,207
4,328
Total current assets
100,181
87,874
Property and equipment, net
4,892
4,893
Intangible assets, net
16,143
18,750
Goodwill
26,896
26,927
Operating lease right-of-use assets
7,999
4,661
Other non-current assets
3,338
3,255
Deferred tax asset
5,645
4,647
Total assets
$
165,094
$
151,007
Liabilities and stockholders’
equity
Liabilities:
Current liabilities:
Current portion of long-term debt
obligations
$
3,000
$
2,500
Accounts payable
10,617
8,109
Accrued and other current liabilities
14,705
16,694
Contract liabilities
4,619
4,089
Current portion of operating lease
liabilities
2,069
2,239
Total current liabilities
35,010
33,631
Long-term debt obligations, net of current
portion
28,887
20,726
Long-term portion of operating lease
liabilities
6,178
2,804
Other long-term liabilities
407
444
Total liabilities
70,482
57,605
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.001,
100,000,000 shares authorized, 35,781,127 and 34,901,954 shares
issued, 33,943,453 and 33,105,080 shares outstanding at September
30, 2023 and December 31, 2022, respectively
36
35
Treasury stock at cost, 1,837,674 and
1,796,862 shares at September 30, 2023 and December 31, 2022,
respectively
(6,043
)
(5,607
)
Additional paid-in capital
109,634
104,893
Accumulated deficit
(5,273
)
(2,296
)
Accumulated other comprehensive loss
(3,742
)
(3,623
)
Total stockholders’ equity
94,612
93,402
Total liabilities and stockholders’
equity
$
165,094
$
151,007
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,
2023
2022
2023
2022
Revenue
$
30,703
$
29,153
$
84,912
$
77,795
Cost of revenue
13,074
12,234
35,445
30,633
Gross profit
17,629
16,919
49,467
47,162
Operating expense:
Selling, general and administrative
12,829
11,678
39,565
39,733
Research, development and engineering
2,719
2,776
8,257
7,983
Amortization of intangible assets
929
987
2,839
2,794
Total operating expense
16,477
15,441
50,661
50,510
Operating income/(loss)
1,152
1,478
(1,194
)
(3,348
)
Other income/(expense):
Other income
115
73
98
146
Interest expense, net
(613
)
(218
)
(1,566
)
(442
)
Total other expense, net
(498
)
(145
)
(1,468
)
(296
)
Income/(loss) from continuing operations
before income taxes
654
1,333
(2,662
)
(3,644
)
Income tax expense/(benefit)
193
165
(723
)
(527
)
Net income/(loss) from continuing
operations
461
1,168
(1,939
)
(3,117
)
Income/(loss) from discontinued
operations, net of income tax expense/(benefit) of $—, $(78),
$(346), and $3,205.
—
28
(1,038
)
622
Gain on sale of discontinued operations,
net of tax of $3,117
—
—
—
10,921
Net income/(loss) from discontinued
operations
—
28
(1,038
)
11,543
Net income/(loss)
$
461
$
1,196
$
(2,977
)
$
8,426
Net income/(loss) per share from
continuing operations:
Basic
$
0.01
$
0.04
$
(0.06
)
$
(0.10
)
Diluted
$
0.01
$
0.03
$
(0.06
)
$
(0.10
)
Net income/(loss) per share from
discontinued operations:
Basic
$
—
$
—
$
(0.03
)
$
0.36
Diluted
$
—
$
—
$
(0.03
)
$
0.36
Net income/(loss) per share attributable
to common stockholders:
Basic
$
0.01
$
0.04
$
(0.09
)
$
0.26
Diluted
$
0.01
$
0.04
$
(0.09
)
$
0.26
Weighted average shares:
Basic
33,917,700
32,800,690
33,631,654
32,492,276
Diluted
35,218,547
34,104,850
33,631,654
32,492,276
Luna Innovations
Incorporated Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows used in by operating
activities
Net (loss)/income
$
(2,977
)
$
8,426
Adjustments to reconcile net (loss)/income
to net cash used in operating activities
Depreciation and amortization
4,092
3,993
Share-based compensation
3,219
3,204
Loss on disposal of property and
equipment
281
—
Gain on sale of discontinued operations,
net of tax
—
(10,921
)
Deferred taxes
(998
)
(3,374
)
Change in assets and liabilities
Accounts receivable
(6,095
)
(6,166
)
Contract assets
1,145
(2,739
)
Inventory
(6,520
)
(6,662
)
Other current assets
202
2,093
Other non-current assets
(121
)
599
Accounts payable and accrued and other
current liabilities
(479
)
5,824
Contract liabilities
111
2,425
Other non-current liabilities
—
13
Net cash used in operating activities
(8,140
)
(3,285
)
Cash flows used in investing
activities
Acquisition of property and equipment
(1,750
)
(2,313
)
Acquisition of intangible property
(95
)
—
Proceeds from sale of discontinued
operations
—
12,973
Acquisition of Luna Innovations Germany
GmbH
—
(22,085
)
Other
—
29
Net cash used in investing activities
(1,845
)
(11,396
)
Cash flows provided by financing
activities
Payments on finance lease obligations
(37
)
(36
)
Proceeds from borrowings under debt
obligations
10,400
22,150
Payments of debt obligations
(1,750
)
(16,275
)
Repurchase of common stock
(436
)
(294
)
Proceeds from ESPP
546
521
Proceeds from the exercise of stock
options
1,272
1,160
Net cash provided by financing
activities
9,995
7,226
Effect of exchange rate changes on cash
and cash equivalents
(6
)
(1,784
)
Net increase/(decrease) in cash and
cash equivalents
4
(9,239
)
Cash and cash equivalents—beginning of
period
6,024
17,128
Cash and cash equivalents—end of
period
$
6,028
$
7,889
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,
2023
2022
2023
2022
Net income/(loss)
$
461
$
1,196
$
(2,977
)
$
8,426
Net income/(loss) from discontinued
operations
—
28
(1,038
)
11,543
Net income/(loss) from continuing
operations
461
1,168
(1,939
)
(3,117
)
Interest expense, net
613
218
1,566
442
Income tax expense/(benefit)
193
165
(723
)
(527
)
Depreciation and amortization
1,353
1,299
4,092
3,993
EBITDA
2,620
2,850
2,996
791
Share-based compensation
1,046
1,027
3,219
3,027
Integration and transaction expense
59
184
308
2,184
Amortization of inventory step-up
—
134
—
391
Other non-recurring charges (1)
447
349
1,236
1,057
Adjusted EBITDA
$
4,172
$
4,544
$
7,759
$
7,450
(1) - Other non-recurring
charges primarily include facility consolidation/set-up costs and
one-time insurance deductible.
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,
2023
2022
2023
2022
Net income/(loss)
$
461
$
1,196
$
(2,977
)
$
8,426
Net income/(loss) from discontinued
operations
—
28
(1,038
)
11,543
Net income/(loss) from continuing
operations
461
1,168
(1,939
)
(3,117
)
Share-based compensation
1,046
1,027
3,219
3,027
Integration and transaction expense
59
184
308
2,184
Amortization of intangible assets
929
988
2,839
2,793
Amortization of inventory step-up
—
134
—
391
Other non-recurring charges (1)
447
349
1,236
1,057
Income tax effect on adjustments
(620
)
(671
)
(1,901
)
(2,363
)
Adjusted income from continuing
operations
$
2,322
$
3,179
$
3,762
$
3,972
Adjusted EPS
$
0.07
$
0.09
$
0.11
$
0.12
Adjusted weighted average shares:
Diluted
35,219
34,105
33,632
32,492
(1) - Other non-recurring
charges primarily include facility consolidation/set-up costs and
one-time insurance deductible.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114163191/en/
Investor Contact: Allison
Woody Phone: 540-769-8465 Email: IR@lunainc.com
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