Reaffirms Full-Year 2023 Outlook
Q2 Highlights
- Total revenues of $29.2 million, up 11% year over
year
- Gross margin of 58%, compared to 61% for the prior
year
- Net loss of $1.6 million, compared to net loss of $2.4
million for the prior year
- Adjusted EBITDA of $2.7 million, compared to $1.2 million
for the prior year
- Adjusted EPS of $0.04, compared to $(0.02) 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 six months ended June 30, 2023.
"We continue to see abundant opportunities for Luna’s
capabilities and are particularly pleased this quarter with strong
performance from our Sensing business," said Scott Graeff,
President and Chief Executive Officer of Luna. "We did experience a
distinct difference in the growth rates of our two businesses –
Sensing and Communications Test. Our Sensing business, including
our project-based solutions, grew strongly. Pressure in the broader
Communications market did impact our Communications Test business.
We continue to secure large, multi-unit, follow-on orders in our
primary markets, and we are seeing significant wins with new
applications.”
Second-Quarter Fiscal 2023 Financial
Summary
Highlights of the financial results for the three months ended
June 30, 2023 are:
Three Months Ended June 30,
Change
(in thousands, except share and per share
data)
2023
2022
Revenues
$
29,164
$
26,162
11
%
Gross profit
16,865
15,963
6
%
Gross margin
58
%
61
%
Operating expense
17,079
18,425
(7
)%
Operating loss
(214
)
(2,462
)
Operating margin
(1
)%
(9
)%
Other expense, net and income tax
benefit
(344
)
(480
)
Net loss from continuing operations
$
(558
)
$
(2,942
)
(Loss)/income from discontinued
operations, net of tax of $(346) and $(856)
(1,038
)
591
Net loss
$
(1,596
)
$
(2,351
)
Loss per diluted share (EPS)
$
(0.05
)
$
(0.07
)
Adjusted EPS
$
0.04
$
(0.02
)
Diluted weighted average shares
outstanding
33,634,538
32,478,736
Adjusted EBITDA
$
2,732
$
1,184
131
%
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 June 30, 2023 increased 11%
compared to the prior-year period.
Gross margin was 58% for the three months ended June 30, 2023,
compared to 61% for the three months ended June 30, 2022, driven
primarily by product mix. Operating loss and margin were $0.2
million and 1% of total revenues, respectively, for the three
months ended June 30, 2023, compared to an operating loss of $2.5
million and 9% of total revenues, respectively, for the three
months ended June 30, 2022.
Net loss was $1.6 million, or $0.05 per fully diluted share, for
the three months ended June 30, 2023, compared to net loss of $2.4
million, or $0.07 per fully diluted share, for the three months
ended June 30, 2022. Adjusted EPS was $0.04 for the three months
ended June 30, 2023 compared to $(0.02) for the three months ended
June 30, 2022.
Adjusted EBITDA was $2.7 million for three months ended June 30,
2023, compared to $1.2 million for the three months ended June 30,
2022.
Six Months Ended Fiscal 2023 Financial
Summary
Highlights of the financial results for the six months ended
June 30, 2023 are:
Six Months Ended June 30,
Change
(in thousands, except share and per share
data)
2023
2022
Revenues
54,209
48,642
11
%
Gross profit
31,838
30,242
5
%
Gross margin
59
%
62
%
Operating expense
34,184
35,069
(3
)%
Operating loss
(2,346
)
(4,827
)
Operating margin
(4
)%
(10
)%
Other expense, net and income tax
benefit
(54
)
542
Net loss from continuing operations
$
(2,400
)
$
(4,285
)
Net (loss)/income from discontinued
operations, net of income taxes of $(346) and $3,283
(1,038
)
11,515
Net (loss)/income
$
(3,438
)
$
7,230
(Loss)/earnings per diluted share
(EPS)
$
(0.10
)
$
0.22
Adjusted EPS
$
0.04
$
0.02
100
%
Diluted weighted average shares
outstanding
33,483,978
32,361,560
Adjusted EBITDA
$
3,586
$
2,905
23
%
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 six months ended June 30, 2023 increased 11%
compared to the prior-year period.
Gross profit of $31.8 million for the six months ended June 30,
2023 increased from $30.2 million for the six months ended June 30,
2022 primarily due to higher sales. Operating loss and margin
improved to $2.3 million and 4% of total revenues, respectively,
for the six months ended June 30, 2023, compared to $4.8 million
and 10% of total revenues, respectively, for the six months ended
June 30, 2022.
Net loss was $3.4 million, or $0.10 per fully diluted share, for
the six months ended June 30, 2023, compared to a net income of
$7.2 million, or $0.22 per fully diluted share, for the six months
ended June 30, 2022. Adjusted EPS was $0.04 for the six months
ended June 30, 2023, compared to $0.02 for the six months ended
June 30, 2022.
Adjusted EBITDA was $3.6 million for the six months ended June
30, 2023, compared to $2.9 million for the six months ended June
30, 2022.
Q2 and Recent Business
Highlights
- Recognized significant wins for monitoring systems, including a
contract for the largest power utility company in Italy
- Secured large, follow-on, multi-unit Terahertz order for EV
battery production process monitoring
- Drove significant wins in our RIO line of lasers supported by
macro trends such as LiDAR
- Secured a seven-figure blanket order for polarization modules
from a major data center hyper-scaler
- Named industry veteran as Managing Director for Europe, Middle
East and Africa region
- Hosted Luna's first Investor Day in New York City, outlining
the company's plans for future growth
2023 Full-Year Outlook
Luna is reaffirming the 2023 revenue and adjusted EBITDA outlook
it originally provided on March 14, 2023:
- Total revenue of $125 million to $130 million for the full year
2023
- Adjusted EBITDA of $14 million to $18 million for the full year
2023
In addition, Luna expects total revenues in the range of $29
million to $32 million for the third quarter 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 5:00 pm (ET) today, August 10, 2023, to discuss
its financial results for the three and six months ended June 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 6350168,
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 and
third quarter of 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 June 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)
June 30, 2023
December 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
3,277
$
6,024
Accounts receivable, net
33,813
33,249
Contract assets
9,601
7,691
Inventory
42,003
36,582
Prepaid expenses and other current
assets
5,159
4,328
Total current assets
93,853
87,874
Property and equipment, net
4,761
4,893
Intangible assets, net
17,371
18,750
Goodwill
27,313
26,927
Operating lease right-of-use assets
3,670
4,661
Other non-current assets
3,321
3,255
Deferred tax asset
4,842
4,647
Total assets
$
155,131
$
151,007
Liabilities and stockholders’
equity
Liabilities:
Current liabilities:
Current portion of long-term debt
obligations
$
3,000
$
2,500
Accounts payable
10,306
8,109
Accrued and other current liabilities
11,375
16,694
Contract liabilities
3,463
4,089
Current portion of operating lease
liabilities
1,899
2,239
Total current liabilities
30,043
33,631
Long-term debt obligations, net of current
portion
27,734
20,726
Long-term portion of operating lease
liabilities
2,062
2,804
Other long-term liabilities
419
444
Total liabilities
60,258
57,605
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.001,
100,000,000 shares authorized, 35,739,827 and 34,901,954 shares
issued, 33,908,336 and 33,105,080 shares outstanding at June 30,
2023 and December 31, 2022, respectively
36
35
Treasury stock at cost, 1,831,491 and
1,796,862 shares at June 30, 2023 and December 31, 2022,
respectively
(5,960
)
(5,607
)
Additional paid-in capital
108,709
104,893
Accumulated deficit
(5,734
)
(2,296
)
Accumulated other comprehensive loss
(2,178
)
(3,623
)
Total stockholders’ equity
94,873
93,402
Total liabilities and stockholders’
equity
$
155,131
$
151,007
Luna Innovations Incorporated
Consolidated Statements of Operations (Unaudited) (in
thousands, except share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
$
29,164
$
26,162
$
54,209
$
48,642
Cost of revenues
12,299
10,199
22,371
18,400
Gross profit
16,865
15,963
31,838
30,242
Operating expense:
Selling, general and administrative
13,439
14,768
26,736
28,056
Research, development and engineering
2,722
2,665
5,538
5,207
Amortization of intangible assets
918
992
1,910
1,806
Total operating expense
17,079
18,425
34,184
35,069
Operating loss
(214
)
(2,462
)
(2,346
)
(4,827
)
Other income/(expense):
Other (expense)/income
(110
)
53
(18
)
73
Interest expense, net
(584
)
(111
)
(953
)
(224
)
Total other expense, net
(694
)
(58
)
(971
)
(151
)
Loss from continuing operations before
income taxes
(908
)
(2,520
)
(3,317
)
(4,978
)
Income tax (benefit)/expense
(350
)
422
(917
)
(693
)
Net loss from continuing operations
(558
)
(2,942
)
(2,400
)
(4,285
)
(Loss)/income from discontinued
operations, net of income tax expense (benefit) of $(346), $(856),
$(346), and $166.
(1,038
)
591
(1,038
)
594
Gain on sale of discontinued operations,
net of tax of $3,117
—
—
—
10,921
Net (loss)/income from discontinued
operations
(1,038
)
591
(1,038
)
11,515
Net (loss)/income
$
(1,596
)
$
(2,351
)
$
(3,438
)
$
7,230
Net loss per share from continuing
operations:
Basic
$
(0.02
)
$
(0.09
)
$
(0.07
)
$
(0.13
)
Diluted
$
(0.02
)
$
(0.09
)
$
(0.07
)
$
(0.13
)
Net (loss)/income per share from
discontinued operations:
Basic
$
(0.03
)
$
0.02
$
(0.03
)
$
0.36
Diluted
$
(0.03
)
$
0.02
$
(0.03
)
$
0.36
Net loss per share attributable to common
stockholders:
Basic
$
(0.05
)
$
(0.07
)
$
(0.10
)
$
0.22
Diluted
$
(0.05
)
$
(0.07
)
$
(0.10
)
$
0.22
Weighted average shares:
Basic
33,634,538
32,478,736
33,483,978
32,361,560
Diluted
33,634,538
32,478,736
33,483,978
32,361,560
Luna Innovations Incorporated
Consolidated Statements of Cash Flows (Unaudited) (in
thousands)
Six Months Ended June
30,
2023
2022
Cash flows used in by operating
activities
Net (loss)/income
$
(3,438
)
$
7,230
Adjustments to reconcile net (loss)/income
to net cash used in operating activities
Depreciation and amortization
2,740
2,694
Share-based compensation
2,172
2,177
Loss on disposal of property and
equipment
278
—
Gain on sale of discontinued operations,
net of tax
—
(10,921
)
Deferred taxes
(194
)
(124
)
Change in assets and liabilities
Accounts receivable
(168
)
(6,555
)
Contract assets
(1,815
)
140
Inventory
(4,798
)
(4,281
)
Other current assets
(804
)
(3,870
)
Other long-term assets
(93
)
646
Accounts payable and accrued and other
current liabilities
(3,653
)
6,123
Contract liabilities
(693
)
1,196
Other long term-liabilities
—
(1,523
)
Net cash used in operating activities
(10,466
)
(7,068
)
Cash flows used in investing
activities
Acquisition of property and equipment
(1,180
)
(1,657
)
Acquisition of intangible property
(63
)
—
Proceeds from sale of property and
equipment
—
25
Proceeds from sale of discontinued
operations
—
12,973
Acquisition of Luna Innovations Germany
GmbH
—
(22,085
)
Other
—
4
Net cash used in investing activities
(1,243
)
(10,740
)
Cash flows provided by financing
activities
Payments on finance lease obligations
(25
)
(24
)
Proceeds from borrowings under debt
obligations
8,500
21,150
Payments of debt obligations
(1,000
)
(15,772
)
Repurchase of common stock
(353
)
(294
)
Proceeds from ESPP
546
521
Proceeds from the exercise of stock
options
1,234
1,158
Net cash provided by financing
activities
8,902
6,739
Effect of exchange rate changes on cash
and cash equivalents
60
(1,195
)
Net decrease in cash and cash
equivalents
(2,747
)
(12,264
)
Cash and cash equivalents-beginning of
period
6,024
17,128
Cash and cash equivalents-end of
period
$
3,277
$
4,864
Luna Innovations Incorporated
Reconciliation of Net (Loss)/Income to EBITDA and Adjusted
EBITDA (in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss)/income
$
(1,596
)
$
(2,351
)
$
(3,438
)
$
7,230
Net (loss)/income from discontinued
operations
(1,038
)
591
(1,038
)
11,515
Net loss from continuing operations
(558
)
(2,942
)
(2,400
)
(4,285
)
Interest expense, net
584
111
953
224
Income tax (benefit)/expense
(350
)
422
(917
)
(693
)
Depreciation and amortization
1,323
1,538
2,740
2,694
EBITDA
999
(871
)
376
(2,060
)
Share-based compensation
1,118
934
2,172
2,000
Integration and transaction expense
160
156
249
2,000
Amortization of inventory step-up
—
257
—
257
Other non-recurring charges (1)
455
708
789
708
Adjusted EBITDA
$
2,732
$
1,184
$
3,586
$
2,905
(1) - Other non-recurring charges
primarily include facility consolidation and one-time insurance
deductible.
Luna Innovations Incorporated
Reconciliation of Net (Loss)/Income to Adjusted EPS (in
thousands, except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss)/income
$
(1,596
)
$
(2,351
)
$
(3,438
)
$
7,230
Net (loss)/income from discontinued
operations
(1,038
)
591
(1,038
)
11,515
Net loss from continuing operations
(558
)
(2,942
)
(2,400
)
(4,285
)
Share-based compensation
1,118
934
2,172
2,000
Integration and transaction expense
160
156
249
2,000
Amortization of intangible assets
918
992
1,910
1,813
Amortization of inventory step-up
—
257
—
257
Other non-recurring charges (1)
455
708
789
708
Income tax effect on adjustments
(663
)
(762
)
(1,280
)
(1,695
)
Adjusted income (loss) from continuing
operations
$
1,430
$
(657
)
$
1,440
$
798
Adjusted EPS
$
0.04
$
(0.02
)
$
0.04
$
0.02
Adjusted weighted average shares:
Diluted
33,635
32,479
33,484
32,362
(1) - Other non-recurring charges
primarily include facility consolidation and one-time insurance
deductible.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810790064/en/
Investor Contact: Allison
Woody Phone: 540-769-8465 Email: IR@lunainc.com
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