Luna Completes Divestiture of Luna
Labs
Acquires LIOS Sensing from NKT
Photonics
Highlights
- Total revenues of $24.2 million for the three months ended
December 31, 2021, up 26%, compared to the three months ended
December 31, 2020
- Gross margin of 58% for the three months ended December 31,
2021, compared to 61% for the three months ended December 31,
2020
- Operating income of $1.0 million for the three months ended
December 31, 2021, compared to operating loss of $0.6 million for
the three months ended December 31, 2020
- Net income of $1.6 million for the three months ended
December 31, 2021, compared to net loss of $0.1 million for the
three months ended December 31, 2020
- Adjusted EBITDA of $3.1 million for the three months ended
December 31, 2021, compared to $3.0 million for the three months
ended December 31, 2020
- Adjusted EPS of $0.08 for the three months ended December
31, 2021, compared to $0.05 for the three months ended December 31,
2020
- Company provides 2022 outlook
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,
2021.
“In many ways, 2021 was a pivotal year for Luna Innovations, and
that has continued into early 2022,” said Scott Graeff, President
and Chief Executive Officer of Luna. “Through the challenges of the
global pandemic, we stayed focused on our strategy and on enhancing
our global leadership position in fiber optic technology. We
integrated the OptaSense acquisition, and subsequent to year-end,
completed the divestiture of Luna Labs and acquired LIOS Sensing.
We reported record backlog and delivered double-digit revenue and
gross profit growth for the fourth-quarter and full-year. Across
our sensing and communications testing businesses, we realized some
of the largest customer orders to date and penetrated into new
geographies and markets, while implementing systems to support
growth."
Graeff continued, "Luna's businesses are stronger than ever. The
strategic initiatives that we undertook during the past five years,
and in particular the past 18 months, have placed us in a better
position to more fully capitalize on the growing 5G network
communications, electric vehicle and other emerging market
opportunities. The absolute focus and dedication of the Luna team
is evident every day, as we serve our customers with excellence.
I'm proud of the team for what they've accomplished and know that
they will continue to execute against our vision: Enabling the
Future with Fiber. We look forward to reporting against our 2022
goals, and updating you on initiatives, over the coming the
months."
Fourth-Quarter Fiscal 2021 Financial
Summary
Highlights of the financial results for the three months ended
December 31, 2021 are:
Three Months Ended December
31,
Change
(in thousands, except per share data)
2021
2020
Revenues
$
24,222
$
19,278
26
%
Gross profit
14,120
11,754
20
%
Gross margin
58
%
61
%
Operating expense
13,085
12,391
6
%
Operating income/(loss)
1,035
(637
)
Operating margin
4.3
%
(3.3
)%
Other (expense)/income and income tax
benefit/(expense)
440
(308
)
Net income/(loss) from continuing
operations
$
1,475
$
(945
)
Income from discontinued operations, net
of income tax expense of $203 and $284
100
881
Net income/(loss)
$
1,575
$
(64
)
Earnings per diluted share (EPS)
$
0.05
$
—
Adjusted EPS
$
0.08
$
0.05
60
%
Diluted weighted average shares
outstanding
33,666
30,896
Adjusted EBITDA
$
3,123
$
3,028
3
%
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 December 31, 2021 increased
26% compared to the prior year period, primarily due to revenue
generated by the businesses the Company acquired during 2020.
Gross margin for the three months ended December 31, 2021 was
58%, compared to 61% for the three months ended December 31, 2020,
driven primarily by product mix as a result of acquisitions.
Operating income increased to $1.0 million for the three months
ended December 31, 2021, compared to an operating loss of $0.6
million for the three months ended December 31, 2020. The increase
in operating income was primarily due to higher revenue resulting
in a higher gross profit, as well as lower acquisition costs in the
current quarter versus the prior-year quarter.
Net income was $1.6 million, or $0.05 per fully diluted share,
for the three months ended December 31, 2021, compared to a net
loss of $0.1 million, or $0.00 per fully diluted share, for the
three months ended December 31, 2020. Adjusted EPS was $0.08 for
the three months ended December 31, 2021 compared to $0.05 for the
three months ended December 31, 2020. Adjusted EBITDA was $3.1
million for the three months ended December 31, 2021, compared to
$3.0 million for the three months ended December 31, 2020.
Full-Year Fiscal 2021 Financial
Summary
Highlights of the financial results for the twelve months ended
December 31, 2021 are:
Full Year Ended December 31,
(in thousands, except per share data)
2021
2020
Change
Revenues
$
87,513
$
59,115
48
%
Gross profit
$
51,556
$
35,880
44
%
Gross margin
59
%
61
%
Operating expense
54,146
35,067
54
%
Operating (loss)/income
(2,590
)
813
Operating margin
(3.0
) %
1.4
%
Other (expense)/income and income tax
benefit/(expense)
1,501
547
Net (loss)/income from continuing
operations
$
(1,089
)
$
1,360
Income from discontinued operations, net
of income tax expense of $584 and $339
2,471
1,931
Net income
$
1,382
$
3,291
Earnings per diluted share (EPS)
$
0.04
$
0.10
(60
)%
Adjusted EPS
$
0.17
$
0.18
(6
)%
Diluted weighted average shares
outstanding
31,658,085
32,578,757
Adjusted EBITDA
$
7,584
$
7,926
(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.
Revenues for the twelve months ended December 31, 2021 increased
48% compared to the prior-year period, primarily due to our
acquisitions in 2020.
Gross margin of 59% for the twelve months ended December 31,
2021 was down compared to 61% for the twelve months ended December
31, 2020 due to product mix as a result of acquisitions. Operating
loss of $2.6 million for the twelve months ended December 31, 2021,
declined compared to operating income of $0.8 million for the
twelve months ended December 31, 2020. The decrease in operating
income was primarily due to incremental amortization of intangible
assets and inventory step-up related to Luna's completed
acquisitions.
Net income was $1.4 million, or $0.04 per fully diluted share,
for the twelve months ended December 31, 2021, compared to a net
income of $3.3 million, or $0.10 per fully diluted share, for the
twelve months ended December 31, 2020. Adjusted EPS was $0.17 for
the twelve months ended December 31, 2021, compared to $0.18 for
the twelve months ended December 31, 2020. Adjusted EBITDA was $7.6
million for the twelve months ended December 31, 2021, compared to
$7.9 million for the twelve months ended December 31, 2020.
Subsequent Events
Subsequent to the close of the fiscal year, Luna completed two
important and strategic transactions:
- Divestiture of Luna Labs, which was moved to Discontinued
Operations in the third quarter 2021
- Acquisition of LIOS Sensing
LIOS Sensing, based in Cologne, Germany, is a recognized market
leader in fiber optic distributed monitoring solutions for power
cable, pipelines, oilfield services, security, highways, railways
and industrial fire detection systems. The acquisition brings to
Luna important Distributed Temperature Sensing ("DTS") intellectual
property, products and expertise. DTS strongly complements Luna's
existing offerings and provides algorithm development expertise,
critical for AI and machine learning.
2022 Full-Year and Q1
Outlook
For fiscal year and Q1 2022, including both the mid-March
divestiture of Luna Labs and the acquisition of LIOS Sensing, Luna
expects:
- Total revenues in the range of $109 million to $115 million for
full year 2022
- Adjusted EBITDA in the range of $10 million to $12 million for
full year 2022
- Total revenues in the range of $20 million to $22 million for
Q1 2022
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, 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 8:30 am (ET) today to discuss its financial
results for the three months and full-year ended December 31, 2021,
as well as the divestiture of Luna Labs and the acquisition of LIOS
Sensing. 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 2096088. 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 2022 financial results
and outlook and growth potential, as well as the impacts of the
recently completed acquisition of OptaSense and LIOS Sensing and
the recently completed divestiture 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 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 of U.S Dollars)
December 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
17,128
$
15,366
Accounts receivable, net
20,913
21,928
Contract assets
5,166
4,139
Inventory
22,493
23,062
Prepaid expenses and other current
assets
3,793
4,434
Assets held for sale
12,952
6,540
Total current assets
82,445
75,469
Property and equipment, net
2,988
2,917
Intangible assets, net
17,177
19,994
Goodwill
18,984
18,121
Operating lease right-of-use asset
5,075
5,984
Other non-current assets
247
369
Deferred tax asset
3,321
1,689
Non-current assets held for sale
—
6,459
Total assets
130,237
131,002
Liabilities and stockholders’
equity
Current liabilities:
Current portion of long-term debt
obligation
$
4,167
$
4,167
Accounts payable
2,809
2,851
Accrued and other current liabilities
9,258
11,325
Contract liabilities
4,649
6,147
Current portion of operating lease
liability
2,101
1,876
Current liabilities held for sale
9,703
3,719
Total current liabilities
32,687
30,085
Long-term debt obligation
11,673
15,817
Long-term portion of operating lease
liability
3,509
5,034
Other long-term liabilities
445
410
Non-current liabilities held for sale
—
5,214
Total liabilities
48,314
56,560
Stockholders’ equity:
Common stock, par value $0.001,
100,000,000 shares authorized, 33,855,725 and 32,724,512 shares
issued, 32,116,270 and 31,024,537 shares outstanding at December
31, 2021 and 2020, respectively
34
33
Treasury stock at cost, 1,744,206 and
1,699,975 shares at December 31, 2021 and 2020, respectively
(5,248
)
(4,789
)
Additional paid-in capital
98,745
92,403
Accumulated deficit
(11,575
)
(12,957
)
Accumulated other comprehensive loss
(33
)
(248
)
Total stockholders’ equity
81,923
74,442
Total liabilities and stockholders’
equity
$
130,237
$
131,002
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,
2021
2020
2021
2020
Revenues
$
24,222
$
19,278
$
87,513
$
59,115
Cost of revenues
10,102
7,524
35,957
23,235
Gross profit
14,120
11,754
51,556
35,880
Operating expense:
Selling, general and administrative
10,542
10,394
43,956
28,353
Research, development and engineering
2,543
1,997
10,190
6,714
Total operating expense
13,085
12,391
54,146
35,067
Operating income/(loss)
1,035
(637
)
(2,590
)
813
Other (expense)/income:
Other income
—
31
—
50
Investment income
—
2
—
67
Interest expense, net
(104
)
(23
)
(479
)
(25
)
Total other (expense)/income
(104
)
10
(479
)
92
Income/(loss) from continuing operations
before income taxes
931
(627
)
(3,069
)
905
Income tax benefit/(expense)
544
(318
)
1,980
455
Income/(loss) from continuing
operations
1,475
(945
)
(1,089
)
1,360
Income from discontinued operations, net
of income taxes
100
881
2,471
1,931
Net income/(loss)
$
1,575
$
(64
)
$
1,382
$
3,291
Net income per share from continuing
operations:
Basic
$
0.04
$
(0.03
)
$
(0.03
)
$
0.04
Diluted
$
0.04
$
(0.03
)
$
(0.03
)
$
0.04
Net loss per share from discontinued
operations:
Basic
$
—
$
0.03
$
0.08
$
0.06
Diluted
$
—
$
0.03
$
0.08
$
0.06
Net income per share attributable to
common stockholders:
Basic
$
0.05
$
—
$
0.04
$
0.11
Diluted
$
0.05
$
—
$
0.04
$
0.10
Weighted average shares (in
thousands):
Basic
32,014
30,896
31,658
30,670
Diluted
33,666
30,896
31,658
32,579
Luna Innovations Incorporated
Consolidated Statements of Cash Flows (in thousands of U.S.
Dollars)
Year ended December
31,
2021
2020
Cash flows provided by operating
activities:
Net income
$
1,382
$
3,291
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
4,628
2,970
Stock-based compensation
2,955
2,134
Loss on sale and disposal of property and
equipment
—
644
Loss from discontinued operations, net of
tax
—
1,436
Deferred tax asset
(1,501
)
(522
)
Bad debt
393
127
Changes in operating assets and
liabilities:
Accounts receivable
(280
)
(3,292
)
Contract assets
(1,672
)
(1,504
)
Inventory
939
(1,550
)
Other current assets
582
(2,203
)
Other long-term assets
—
(3
)
Accounts payable and accrued expenses
(3,213
)
1,143
Contract liabilities
186
(29
)
Other long-term liabilities
84
214
Net cash provided by operating
activities
4,483
2,856
Cash flows used in investing
activities:
Acquisitions, net of cash acquired
—
(34,102
)
Acquisition of property and equipment
(1,412
)
(681
)
Proceeds from sale of property and
equipment
—
403
Intangible property costs
(356
)
(379
)
Proceeds from sale of discontinued
operations, net
—
600
Net cash used in investing activities
(1,768
)
(34,159
)
Cash flows provided by/(used in)
financing activities:
Proceeds from debt obligations
—
19,984
Payments on debt obligations
(4,144
)
—
Payments on finance lease obligation
(48
)
(53
)
Purchase of treasury stock
(459
)
(452
)
Proceeds from ESPP
1,131
456
Proceeds from the exercise of options
2,256
1,714
Net cash (used in)/provided by financing
activities
(1,264
)
21,649
Net change in cash and cash
equivalents
1,451
(9,654
)
Effect of exchange rate changes on cash
and cash equivalents
311
14,000
Cash and cash equivalents—beginning of
period
15,366
25,006
Cash and cash equivalents—end of
period
$
17,128
$
15,366
Supplemental disclosure of cash flow
information
Cash paid for interest
$
458
$
4
Cash paid for income taxes
$
113
$
(1,244
)
Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to Adjusted EBITDA (in
thousands)
Three months ended December
31,
Year ended December
31,
2021
2020
2021
2020
Net income/(loss)
$
1,575
$
(64
)
$
1,382
$
3,291
Income from discontinued operations, net
of income taxes
100
881
2,471
1,931
Net income/(loss) from continuing
operations
1,475
(945
)
(1,089
)
1,360
Interest expense
104
23
479
25
Investment income
—
(2
)
—
(67
)
Income tax (benefit)/provision
(544
)
318
(1,980
)
(455
)
Depreciation and amortization
1,077
790
4,517
2,769
EBITDA
2,112
184
1,927
3,632
Share-based compensation
693
562
2,826
2,012
Integration and transaction expense
249
2,204
2,322
2,204
Amortization of inventory step-up
69
78
509
78
Adjusted EBITDA
$
3,123
$
3,028
$
7,584
$
7,926
Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to Adjusted EPS (in
thousands)
Three months ended December
31,
Year ended December
31,
2021
2020
2021
2020
Net income/(loss)
$
1,575
$
(64
)
$
1,382
$
3,291
Income from discontinued operations, net
of income taxes
100
881
2,471
1,931
Net income/(loss) from continuing
operations
1,475
(945
)
(1,089
)
1,360
Share-based compensation
693
562
2,826
2,012
Integration and transaction expense
249
2,204
2,322
2,204
Amortization of intangible assets
760
478
3,113
1,714
Amortization of inventory step-up
69
78
509
78
Income tax effect on adjustments
(443
)
(831
)
(2,193
)
(1,502
)
Adjusted income from continuing
operations
$
2,803
$
1,546
$
5,488
$
5,866
Adjusted EPS
$
0.08
$
0.05
$
0.17
$
0.18
Adjusted weighted average shares (in
thousands):
Diluted
33,666
30,896
31,658
32,579
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220314005236/en/
Investor Contact: Allison
Woody Phone: 540-769-8465 Email: IR@lunainc.com
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