Company provides 2021 outlook
Fourth Quarter
Highlights
- Created the world's largest fiber optic sensing company with
the acquisition of OptaSense Holdings, Ltd ("OptaSense") in early
December
- Total revenues of $25.9 million for the three months ended
December 31, 2020, up 33%, compared to the prior-year period
- Excluding the acquisition of OptaSense, total revenues of
$24.4 million, up 25%
- Operating income of $0.5 million for the three months ended
December 31, 2020, compared to $1.7 million for the prior-year
period
- Excluding the acquisition of OptaSense and
acquisition-related expenses, operating income of $3.7 million for
the three months ended December 31, 2020
- Net loss from continuing operations of $0.1 million for the
three months ended December 31, 2020, compared to net income from
continuing operations of $2.1 million for the prior-year period
- Excluding the acquisition of OptaSense and
acquisition-related expenses, net income from continuing operations
of $3.0 million, or $0.09 per fully diluted share, for three months
ended December 31, 2020
- Adjusted EBITDA of $4.3 million for the three months ended
December 31, 2020, compared to $3.2 million for the prior-year
period
- Excluding the acquisition of OptaSense and
acquisition-related expenses, adjusted EBITDA of $5.0 million for
the three months ended December 31, 2020
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in
advanced optical technology, today announced its financial results
for the three months and full fiscal year ended December 31,
2020.
“Our outstanding operating and financial performance in 2020 in
the midst of a pandemic underscores the strength of our product
portfolio, our ability to innovate and the fact that we are clear
about our strategy and have not wavered from our stated vision,”
said Scott Graeff, President and Chief Executive Officer of Luna.
“From an operational standpoint, the absolute focus and dedication
of our team was evident as we continued to execute against that
strategy to support our customers, keep our employees safe and
deliver the financial results that we guided to before COVID
permeated our lives."
Graeff continued, "In spite of the fact that we could not travel
and meet in person, we continued to work our acquisition pipeline
and recently completed the acquisition of OptaSense, the largest
transaction in our history. Our financial achievements were equally
as impressive, achieving double-digit top-line growth and record
revenue for 2020. I am inspired by the commitment and hard work of
the Luna team, all of whom continued to ensure service excellence
for our customers. This performance and focus gives us a very
strong springboard entering 2021.”
Fourth Quarter Fiscal 2020 Financial
Summary
Financial results for the three months ended December 31, 2020
continue the strong momentum throughout the fiscal year. The
reported performance metrics below include OptaSense for the stub
period starting from the acquisition date of December 3, 2020
through December 31, 2020. Given the timing of the close of the
transaction so late in the quarter and fiscal year, the inclusion
of the results of operations of OptaSense for this stub period does
not reflect integration costs or cost synergies from the
transaction.
Highlights of the financial results for the three months ended
December 31, 2020 are:
Three Months Ended December
31,
(in thousands, except per share data)
2020
2019
Change
Revenues:
Lightwave
$
19,278
$
13,988
38
%
Luna Labs
6,637
5,492
21
%
Total revenues
25,915
19,480
33
%
Gross profit
13,358
10,388
29
%
Gross margin
51.5
%
53.3
%
Operating expense
12,828
8,670
48
%
Operating income
530
1,718
(69)
%
Operating margin
2.0
%
8.8
%
Net income/(loss) from continuing
operations
$
(64)
$
2,146
(103)
%
Diluted weighted average shares
outstanding (in thousands)
32,831
32,212
Net income per share from continuing
operations (diluted)
$
—
$
0.07
Adjusted EBITDA
$
4,283
$
3,238
32
%
A reconciliation of Adjusted EBITDA to net (loss)/income can be
found in the schedules included in this release.
The reported results reflect the inclusion of the incremental
revenues of $1.5 million associated with the operations of
OptaSense for the stub period from December 3, 2020 through
December 31, 2020. Excluding the revenue from OptaSense, Lightwave
revenue increased by $3.8 million for the three months ended
December 31, 2020, or 27%, compared to the prior year period, to
$17.8 million. This increase in revenue was due to increased
revenues associated with communications test and fiber optic
sensing products. Luna Labs revenues increased for the three months
ended December 31, 2020, compared to the prior-year period due in
part to a large shipment of product to a US military branch to help
reduce maintenance costs. Excluding the revenue from OptaSense,
total revenue increased by $4.9 million, or 25%, compared to the
prior year period, to $24.4 million.
Gross profit for the three months ended December 31, 2020
increased compared to the prior-year period due to increased
revenues associated with legacy Luna operations as well as an
incremental $0.7 million of gross profit associated with the
operations of OptaSense for the stub period from December 3, 2020
through December 31, 2020. Excluding the gross profit from
OptaSense, gross profit increased $2.3 million, or 22%, compared to
the prior year period, to $12.7 million.
The increase in operating expenses was primarily a result of
$2.2 million of acquisition related expenses incurred in connection
with the acquisition of OptaSense and $1.6 million of expenses
associated with OptaSense operations for the stub period from
December 3, 2020 through December 31, 2020, as well continued
incremental investment in sales and engineering to support Luna's
growth. Excluding the acquisition-related expenses and expenses of
OptaSense operations, operating income increased $2.0 million, or
114%, compared to the prior-year period, to $3.7 million,
representing an operating margin on legacy Luna operations of
15%.
Net loss from continuing operations was $0.1 million, or $0.00
per fully diluted share, for the three months ended December 31,
2020, compared to net income from continuing operations of $2.1
million, or $0.07 per fully diluted share, for the prior-year
period. The decrease in net income from continuing operations was
driven by $2.3 million of acquisition related expenses more than
offsetting increased revenue and strong operating results from
Luna's legacy operations. Excluding acquisition-related expenses
and a $0.9 million loss from the operations of OptaSense, net
income from continuing operations increased by $0.8 million, or
39%, to $3.0 million or $0.09 per fully diluted share.
Adjusted EBITDA was $4.3 million for the three months ended
December 31, 2020, compared to $3.2 million for the three months
ended December 31, 2019. The increase was driven by revenue growth
from both Lightwave and Luna Labs. Legacy Adjusted EBITDA, which
excludes the effects of the OptaSense acquisition, was $5.0 million
for the three months ended December 31, 2020.
Full-Year Fiscal 2020 Financial
Summary
Highlights of the financial results for the twelve months ended
December 31, 2020 are:
Full Year Ended December 31,
(in thousands, except per share data)
2020
2019
Change
Revenues:
Lightwave
$
59,115
$
49,117
20
%
Luna Labs
$
23,566
$
21,399
10
%
Total revenues
$
82,681
$
70,516
17
%
Gross profit
$
42,188
$
35,183
20
%
Gross margin
51.0
%
49.9
%
Operating expense
37,205
31,867
17
%
Operating income
4,983
3,316
50
%
Operating margin
6.0
%
4.7
%
Net income from continuing operations
$
4,727
$
5,343
(12)
%
Diluted weighted average shares
outstanding
32,579
31,841
Net income per share from continuing
operations (diluted)
$
0.15
$
0.17
Adjusted EBITDA
$
13,087
$
9,473
38
%
A reconciliation of Adjusted EBITDA to net income can be found
in the schedules included in this release.
2021 Full-Year Outlook:
For fiscal year 2021, Luna expects:
- Total revenues in the range of $122 million to $127 million for
full fiscal 2021; and
- Adjusted EBITDA in the range of $16 million to $19 million for
full fiscal 2021.
Luna is not providing an outlook for net income, 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, Legacy Adjusted EBITDA and
Legacy Adjusted EPS, which exclude certain charges and credits that
are required by GAAP. Adjusted EBITDA, Legacy Adjusted EBITDA and
Legacy 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. Legacy Adjusted EBITDA and Legacy Adjusted EPS
exclude the effects of the acquisition of OptaSense in December
2020, which management believes is useful to assess the
profitability of the legacy Luna business on a standalone basis.
Adjusted EBITDA, Legacy Adjusted EBITDA and Legacy Adjusted EPS
should be considered in addition to results prepared in accordance
with GAAP, but should not be considered substitutes for, or
superior to, GAAP results. Adjusted EBITDA, Legacy Adjusted EBITDA
and Legacy 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 months and full year ended December 31, 2020.
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 3898157. 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 growth potential, as well as the impacts of the
recently completed acquisition of OptaSense. 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 and those risks and uncertainties set forth in Luna’s
Form 10-Q for the quarter ended September 30, 2020, 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 of U.S Dollars)
December 31, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
15,366
$
25,006
Accounts receivable, net
24,951
16,269
Receivable from sale of HSOR business
—
2,501
Contract assets
7,046
2,759
Inventory
23,597
10,294
Prepaid expenses and other current
assets
4,509
1,287
Total current assets
75,469
58,116
Property and equipment, net
3,308
3,466
Intangible assets, net
20,109
10,194
Goodwill
18,121
10,542
Long term contract assets
471
449
Operating lease ROU asset
11,281
2,236
Finance lease ROU asset
244
70
Other assets
39
35
Deferred tax asset
1,960
1,416
Total assets
131,002
86,524
Liabilities and stockholders’
equity
Current liabilities:
Current portion of long-term debt
obligation
$
4,167
$
—
Accounts payable
4,393
2,787
Accrued liabilities
12,159
9,036
Contract liabilities
7,095
3,888
Current portion of operating lease ROU
liability
2,223
1,283
Current portion of finance lease ROU
liability
48
50
Total current liabilities
30,085
17,044
Long-term debt obligation
15,817
—
Long-term portion of operating lease ROU
liability
10,248
1,988
Long-term portion of finance lease ROU
liability
196
23
Other long-term liabilities
214
—
Total liabilities
56,560
19,055
Stockholders’ equity:
Common stock, par value $0.001,
100,000,000 shares authorized, 32,724,512 and 31,788,896 shares
issued, 31,024,537 and 30,149,105 shares outstanding at December
31, 2020 and 2019, respectively
33
32
Treasury stock at cost, 1,699,975 and
1,639,791 shares at December 31, 2020 and 2019, respectively
(4,789)
(4,337)
Additional paid-in capital
92,403
88,022
Accumulated deficit
(12,957)
(16,248)
Accumulated other comprehensive loss
(248)
—
Total stockholders’ equity
74,442
67,469
Total liabilities and stockholders’
equity
$
131,002
$
86,524
Luna Innovations Incorporated
Consolidated Statements of Operations (in thousands of U.S.
Dollars, except per share data)
Three months ended December
31,
Year ended December
31,
2020
2019
2020
2019
Revenues:
Lightwave revenues
$
19,278
$
13,988
$
59,115
$
49,117
Luna Labs revenues
6,637
5,492
23,566
21,399
Total revenues
25,915
19,480
82,681
70,516
Cost of revenues:
Lightwave costs
7,570
5,070
23,306
20,157
Luna Labs costs
4,987
4,022
17,187
15,176
Total cost of revenues
12,557
9,092
40,493
35,333
Gross profit
13,358
10,388
42,188
35,183
Operating expense:
Selling, general and administrative
8,559
6,330
27,644
23,344
Research, development and engineering
1,996
2,255
6,713
7,496
Acquisition related expense
2,204
85
2,204
1,027
Loss on sale and disposal of property and
equipment
69
—
644
—
Total operating expense
12,828
8,670
37,205
31,867
Operating income
530
1,718
4,983
3,316
Other income/(expense):
Other income/(expense), net
31
(1)
50
(5)
Investment income
2
69
67
394
Interest expense, net
(23)
(1)
(25)
(16)
Total other income
10
67
92
373
Income from continuing operations before
income taxes
540
1,785
5,075
3,689
Income tax (expense)/benefit
(604)
361
(348)
1,654
(Loss)/income from continuing
operations
(64)
2,146
4,727
5,343
Income from discontinued operations, net
of income taxes
—
—
(1,436)
—
Net (loss)/income
(64)
2,146
3,291
5,343
Preferred stock dividend
—
—
—
286
Net (loss)/income attributable to common
stockholders
$
(64)
$
2,146
$
3,291
$
5,057
Net income per share from continuing
operations:
Basic
$
—
$
0.07
$
0.15
$
0.19
Diluted
$
—
$
0.07
$
0.15
$
0.17
Net loss per share from discontinued
operations:
Basic
$
—
$
—
$
(0.05)
$
—
Diluted
$
—
$
—
$
(0.04)
$
—
Net income per share attributable to
common stockholders:
Basic
$
—
$
0.07
$
0.11
$
0.18
Diluted
$
—
$
0.07
$
0.10
$
0.16
Weighted average shares (in
thousands):
Basic
30,896
30,159
30,670
28,689
Diluted
32,831
32,212
32,579
31,841
Luna Innovations Incorporated
Consolidated Statements of Cash Flows (in thousands of U.S.
Dollars)
Year ended December
31,
2020
2019
Cash flows provided by operating
activities:
Net income
$
3,291
$
5,343
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
2,970
2,503
Stock-based compensation
2,134
1,544
Loss on sale and disposal of property and
equipment
644
—
Loss from discontinued operations, net of
tax
1,436
—
Deferred tax asset
(522)
—
Tax benefit from release of valuation
allowance
—
(3,349)
Bad debt
127
538
Changes in operating assets and
liabilities:
Accounts receivable
(3,292)
(2,249)
Contract assets
(1,504)
(449)
Inventory
(1,550)
(723)
Other current assets
(2,203)
(242)
Other long-term assets
(3)
45
Accounts payable and accrued expenses
1,143
592
Contract liabilities
(29)
1,245
Other long-term liabilities
214
—
Net cash provided by operating
activities
2,856
4,798
Cash flows used in investing
activities:
Acquisitions, net of cash acquired
(34,102)
(19,004)
Acquisition of property and equipment
(681)
(541)
Proceeds from sale of property and
equipment
403
—
Intangible property costs
(379)
(270)
Proceeds from sale of discontinued
operations, net
600
—
Net cash used in investing activities
(34,159)
(19,815)
Cash flows provided by/(used in)
financing activities:
Proceeds from debt obligations
19,984
—
Payments on debt obligations
—
(625)
Payments on finance lease obligation
(53)
(40)
Purchase of treasury stock
(452)
(2,220)
Proceeds from ESPP
456
—
Proceeds from the exercise of options
1,714
448
Net cash provided by/(used in) financing
activities
21,649
(2,437)
Net change in cash and cash
equivalents
(9,654)
(17,454)
Effect of exchange rate changes on cash
and cash equivalents
14
—
Cash and cash equivalents—beginning of
period
25,006
42,460
Cash and cash equivalents—end of
period
$
15,366
$
25,006
Supplemental disclosure of cash flow
information
Cash paid for interest
$
4
$
18
Cash paid for income taxes
$
1,244
$
1,160
Contingent liability for business
combinations
$
225
$
1,000
Dividend on preferred stock
$
—
$
286
Luna Innovations Incorporated
Reconciliation of Net Income to Adjusted EBITDA and Legacy Adjusted
EBITDA (in thousands)
Three months ended
December 31,
Year ended December
31,
2020
2019
2020
2019
Net (loss)/income
$
(64)
$
2,146
$
3,291
$
5,343
Loss from discontinued operations, net of
income taxes
—
—
(1,436)
—
Net (loss)/income from continuing
operations
(64)
2,146
4,727
5,343
Interest expense
23
1
25
16
Investment income
(2)
(69)
(67)
(394)
Income tax expense/(benefit)
604
(361)
348
(1,654)
Depreciation and amortization
844
669
2,970
2,503
EBITDA
1,405
2,386
8,003
5,814
Share-based compensation
596
404
2,134
1,544
Acquisition related expense
2,204
85
2,204
1,027
Amortization of inventory step-up
78
—
78
725
Non-recurring charges
—
363
668
363
Adjusted EBITDA
$
4,283
$
3,238
$
13,087
$
9,473
OptaSense operating loss
869
—
869
—
Less: depreciation and amortization
154
—
154
—
Less: amortization of inventory
step-up
35
—
35
—
Legacy Adjusted EBITDA
$
4,963
$
3,238
$
13,767
$
9,473
Luna Innovations Incorporated
Reconciliation of Net Income to Adjusted EPS and Legacy Adjusted
EPS (in thousands)
Three months ended
December 31,
Year ended December
31,
2020
2019
2020
2019
Net (loss)/income
$
(64)
$
2,146
$
3,291
$
5,343
Loss from discontinued operations, net of
income taxes
—
—
(1,436)
—
Net (loss)/income from continuing
operations
(64)
2,146
4,727
5,343
Share-based compensation
596
404
2,134
1,544
Acquisition related expense
2,204
85
2,204
1,027
Amortization of inventory step-up
78
—
78
725
Non-recurring charges
—
363
668
363
Release of valuation allowance
(568)
(907)
Income tax adjustment
(322)
(232)
(1,198)
(811)
Adjusted income from continuing
operations
$
2,492
$
2,198
$
8,613
$
7,284
OptaSense net loss
(863)
—
(863)
—
Legacy adjusted income from continuing
operations
$
3,355
$
2,198
$
9,476
$
7,284
Adjusted EPS
$
0.08
$
0.07
$
0.26
$
0.23
Legacy Adjusted EPS
$
0.10
$
0.07
$
0.29
$
0.23
Adjusted weighted average shares (in
thousands):
Diluted
32,831
32,212
32,579
31,841
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210311006001/en/
Investors: Allison Woody
Phone: 540-769-8465 Email: IR@lunainc.com
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