Reaffirms 2022 Outlook
Highlights
- Total revenues of $22.5 million for the three months ended March 31, 2022, up 7% compared to the three months ended March 31, 2021
- Gross margin of 64% for the three months ended March 31, 2022, compared to 58% for the three months ended March 31, 2021
- Operating loss of $2.4 million for the three months ended March 31, 2022, compared to operating loss of $1.6 million for the three months ended March 31, 2021
- Net income of $9.6 million for the three months ended March 31, 2022, which includes the gain on sale of Luna Labs, compared to net loss of $0.3 million for the three months ended March 31, 2021
- Adjusted EBITDA of $1.7 million for the three months ended March 31, 2022, compared to $1.3 million for the three months ended March 31, 2021
- Adjusted EPS of $0.05 for the three months ended March 31, 2022, compared to $0.03 for the three months ended March 31, 2021
Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in advanced optical technology, today announced its financial results for the three months ended March 31, 2022. The first-quarter 2022 results include two weeks of Lios, Luna's newest acquisition.
"I'm very pleased with our first-quarter performance as the Luna team delivered a solid start to 2022," said Scott Graeff, President and Chief Executive Officer of Luna. "We surpassed the top end of the Q1 revenue guidance we provided in March, while completing significant events including the divestiture of Luna Labs, the acquisition of Lios and the complete absorption of OptaSense into our operations. And, as always, the Luna team is laser-focused on executing against our strategy. During the past year, you've seen us make some strategic moves to refresh our product lines and broaden our IP. We've done this to leverage and incorporate the best of our organic portfolio with cutting-edge technology and products from recent acquisitions to create highly competitive product offerings."
Graeff continued, "As a result of the moves we've made, today Luna is a company with blue-chip customers, over a dozen of which are long-term, resulting in many large, multi-unit purchase orders. For example, we've gone from shipping one or two boxes to being completely integrated into Lockheed Martin's F-35 global program. I'm incredibly proud of the team for managing through the numerous puts and takes over the past six quarters, as we solidify Luna as a clear leader and a company fully focused on Enabling the Future with Fiber."
First-Quarter Fiscal 2022 Financial Summary
Highlights of the financial results for the three months ended March 31, 2022 are:
|
|
Three Months Ended March 31, |
|
Change |
|||||||
(in thousands, except share and per share data) |
|
2022 |
|
2021 |
|
|
|||||
Revenues |
|
$ |
22,481 |
|
|
$ |
20,997 |
|
|
7 |
% |
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
14,279 |
|
|
|
12,271 |
|
|
16 |
% |
Gross margin |
|
|
64 |
% |
|
|
58 |
% |
|
|
|
|
|
|
|
|
|
||||||
Operating expense |
|
|
16,645 |
|
|
|
13,851 |
|
|
20 |
% |
Operating loss |
|
|
(2,366 |
) |
|
|
(1,580 |
) |
|
|
|
Operating margin |
|
|
(11 |
) % |
|
|
(8 |
) % |
|
|
|
|
|
|
|
|
|
||||||
Other expense and income tax benefit |
|
|
1,023 |
|
|
|
521 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss from continuing operations |
|
$ |
(1,343 |
) |
|
$ |
(1,059 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
Income from discontinued operations, net of income taxes |
|
|
10,924 |
|
|
|
740 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income/(loss) |
|
$ |
9,581 |
|
|
$ |
(319 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings/(loss) per diluted share (EPS) |
|
$ |
0.30 |
|
|
$ |
(0.01 |
) |
|
|
|
Adjusted EPS |
|
$ |
0.05 |
|
|
$ |
0.03 |
|
|
67 |
% |
Diluted weighted average shares outstanding |
|
|
32,243,082 |
|
|
|
31,350,629 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
1,721 |
|
|
$ |
1,331 |
|
|
29 |
% |
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 March 31, 2022 increased 7% compared to the prior-year period, primarily due to revenue generated by the Lios acquisition.
Gross margin increased to 64% for the three months ended March 31, 2022, compared to 58% for the three months ended March 31, 2021, driven primarily by favorable product mix. Operating loss and margin were $2.4 million and 11% of total revenues, respectively, for the three months ended March 31, 2022, compared to $1.6 million and 8% of total revenues, respectively, for the three months ended March 31, 2021. The increase in operating loss was primarily due to an increase in deal and integration costs related to the acquisition of Lios.
Net income was $9.6 million, or $0.30 per fully diluted share, for the three months ended March 31, 2022, compared to net loss of $0.3 million, or $0.01 per fully diluted share, for the three months ended March 31, 2021. Adjusted EPS was $0.05 for the three months ended March 31, 2022 compared to $0.03 for the three months ended March 31, 2021.
Adjusted EBITDA was $1.7 million for three months ended March 31, 2022, compared to $1.3 million for the three months ended March 31, 2021.
2022 Full-Year Outlook
Luna is confirming the 2022 outlook it originally provided on March 14, 2022, which included the mid-March divestiture of Luna Labs and the acquisition of Lios:
- Total revenue of $109 million to $115 million for the full year 2022
- Adjusted EBITDA of $10 million to $12 million for the full year 2022
- Total revenues in the range of $25 million to $27 million for the second quarter 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 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 8:30 am (ET) today to discuss its financial results for the three months ended March 31, 2022. 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 6847538. 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 the Company's growth potential. 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 March 31, 2022, 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) |
||||||||
|
|
|
|
|
||||
|
|
March 31, 2022 |
|
December 31, 2021 |
||||
|
(unaudited) |
|
|
|||||
Assets |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
10,788 |
|
|
$ |
17,128 |
|
|
Accounts receivable, net |
|
26,261 |
|
|
|
20,913 |
|
|
Contract assets |
|
4,889 |
|
|
|
5,166 |
|
|
Inventory |
|
28,891 |
|
|
|
22,493 |
|
|
Prepaid expenses and other current assets |
|
7,152 |
|
|
|
3,793 |
|
|
Assets held for sale |
|
— |
|
|
|
12,952 |
|
|
Total current assets |
|
77,981 |
|
|
|
82,445 |
|
|
Property and equipment, net |
|
4,398 |
|
|
|
2,988 |
|
|
Intangible assets, net |
|
22,332 |
|
|
|
17,177 |
|
|
Goodwill |
|
29,199 |
|
|
|
18,984 |
|
|
Operating lease right-of-use assets |
|
5,544 |
|
|
|
5,075 |
|
|
Other non-current assets |
|
3,872 |
|
|
|
247 |
|
|
Deferred tax asset |
|
1,339 |
|
|
|
3,321 |
|
|
Total assets |
$ |
144,665 |
|
|
$ |
130,237 |
|
|
Liabilities and stockholders’ equity |
|
|
|
|||||
Liabilities: |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current portion of long-term debt obligations |
$ |
4,167 |
|
|
$ |
4,167 |
|
|
Accounts payable |
|
2,617 |
|
|
|
2,809 |
|
|
Accrued and other current liabilities |
|
17,312 |
|
|
|
9,258 |
|
|
Contract liabilities |
|
4,047 |
|
|
|
4,649 |
|
|
Current portion of operating lease liabilities |
|
2,458 |
|
|
|
2,101 |
|
|
Liabilities associated with assets held for sale |
|
— |
|
|
|
9,703 |
|
|
Total current liabilities |
|
30,601 |
|
|
|
32,687 |
|
|
Long-term debt obligations, net of current portion |
|
18,087 |
|
|
|
11,673 |
|
|
Long-term portion of operating lease liabilities |
|
3,526 |
|
|
|
3,509 |
|
|
Other long-term liabilities |
|
434 |
|
|
|
445 |
|
|
Total liabilities |
|
52,648 |
|
|
|
48,314 |
|
|
Commitments and contingencies |
|
|
|
|||||
Stockholders’ equity: |
|
|
|
|||||
Common stock, par value $0.001, 100,000,000 shares authorized, 34,143,411 and 33,855,725 shares issued, 32,361,122 and 32,116,270 shares outstanding at March 31, 2022 and December 31, 2021, respectively |
|
34 |
|
|
|
34 |
|
|
Treasury stock at cost, 1,782,289 and 1,744,026 shares at March 31, 2022 and December 31, 2021, respectively |
|
(5,526 |
) |
|
|
(5,248 |
) |
|
Additional paid-in capital |
|
99,906 |
|
|
|
98,745 |
|
|
Accumulated deficit |
|
(1,994 |
) |
|
|
(11,575 |
) |
|
Accumulated other comprehensive loss |
|
(403 |
) |
|
|
(33 |
) |
|
Total stockholders’ equity |
|
92,017 |
|
|
|
81,923 |
|
|
Total liabilities and stockholders’ equity |
$ |
144,665 |
|
|
$ |
130,237 |
|
|
Luna Innovations Incorporated |
||||||||
Consolidated Statements of Operations (Unaudited) |
||||||||
(in thousands, except share and per share data) |
||||||||
|
Three Months Ended March 31, |
|||||||
|
2022 |
|
2021 |
|||||
|
|
|||||||
Revenues |
$ |
22,481 |
|
|
$ |
20,997 |
|
|
Cost of revenues |
|
8,202 |
|
|
|
8,726 |
|
|
Gross profit |
|
14,279 |
|
|
|
12,271 |
|
|
Operating expense: |
|
|
|
|||||
Selling, general and administrative |
|
14,102 |
|
|
|
10,934 |
|
|
Research, development and engineering |
|
2,543 |
|
|
|
2,917 |
|
|
Total operating expense |
|
16,645 |
|
|
|
13,851 |
|
|
Operating loss |
|
(2,366 |
) |
|
|
(1,580 |
) |
|
Other (expense)/income: |
|
|
|
|||||
Other income |
|
21 |
|
|
|
— |
|
|
Interest expense |
|
(113 |
) |
|
|
(143 |
) |
|
Total other expense |
|
(92 |
) |
|
|
(143 |
) |
|
Loss from continuing operations before income taxes |
|
(2,458 |
) |
|
|
(1,723 |
) |
|
Income tax benefit |
|
(1,115 |
) |
|
|
(664 |
) |
|
Net loss from continuing operations |
|
(1,343 |
) |
|
|
(1,059 |
) |
|
Income from discontinued operations, net of income tax of $1,022 and $46 |
|
3 |
|
|
|
740 |
|
|
Gain on sale of discontinued operations, net of tax of $3,117 |
|
10,921 |
|
|
|
— |
|
|
Net income from discontinued operations |
|
10,924 |
|
|
|
740 |
|
|
Net income/(loss) |
$ |
9,581 |
|
|
$ |
(319 |
) |
|
Net loss per share from continuing operations: |
|
|
|
|||||
Basic |
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
Diluted |
$ |
(0.04 |
) |
|
$ |
(0.03 |
) |
|
Net income per share from discontinued operations: |
|
|
|
|||||
Basic |
$ |
0.34 |
|
|
$ |
0.02 |
|
|
Diluted |
$ |
0.34 |
|
|
$ |
0.02 |
|
|
Net income/(loss) per share attributable to common stockholders: |
|
|
|
|||||
Basic |
$ |
0.30 |
|
|
$ |
(0.01 |
) |
|
Diluted |
$ |
0.30 |
|
|
$ |
(0.01 |
) |
|
Weighted average shares: |
|
|
|
|||||
Basic |
|
32,243,082 |
|
|
|
31,350,629 |
|
|
Diluted |
|
32,243,082 |
|
|
|
31,350,629 |
|
|
Luna Innovations Incorporated |
||||||||
Consolidated Statements of Cash Flows (Unaudited) |
||||||||
(in thousands) |
||||||||
|
|
|
||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2022 |
|
2021 |
||||
|
|
|||||||
Cash flows used in operating activities |
|
|
|
|||||
Net income/(loss) |
$ |
9,581 |
|
|
$ |
(319 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|||||
Depreciation and amortization |
|
1,179 |
|
|
|
1,231 |
|
|
Share-based compensation |
|
1,132 |
|
|
|
657 |
|
|
Loss from discontinued operations, net of tax |
|
(10,921 |
) |
|
|
— |
|
|
Deferred taxes |
|
220 |
|
|
|
— |
|
|
Tax benefit from release of valuation allowance |
|
— |
|
|
|
262 |
|
|
Change in assets and liabilities |
|
|
|
|||||
Accounts receivable |
|
(1,795 |
) |
|
|
1,439 |
|
|
Contract assets |
|
(1,144 |
) |
|
|
(729 |
) |
|
Inventory |
|
(1,416 |
) |
|
|
(1,617 |
) |
|
Other current assets |
|
(1,636 |
) |
|
|
(847 |
) |
|
Other long term assets |
|
2 |
|
|
|
(80 |
) |
|
Accounts payable and accrued expenses |
|
2,287 |
|
|
|
(1,939 |
) |
|
Contract liabilities |
|
171 |
|
|
|
(992 |
) |
|
Other long term liabilities |
|
(33 |
) |
|
|
— |
|
|
Net cash used in operating activities |
|
(2,373 |
) |
|
|
(2,934 |
) |
|
Cash flows used in investing activities |
|
|
|
|||||
Acquisition of property and equipment |
|
(915 |
) |
|
|
(361 |
) |
|
Intangible property costs |
|
38 |
|
|
|
(48 |
) |
|
Proceeds from sale of property and equipment |
|
25 |
|
|
|
— |
|
|
Proceeds from sale of discontinued operations |
|
12,973 |
|
|
|
— |
|
|
Acquisition of Lios |
|
(22,085 |
) |
|
|
— |
|
|
Net cash used in investing activities |
|
(9,964 |
) |
|
|
(409 |
) |
|
Cash flows provided by/(used in) financing activities |
|
|
|
|||||
Payments on finance lease obligations |
|
(12 |
) |
|
|
(12 |
) |
|
Payments of debt obligations |
|
(1,036 |
) |
|
|
(1,036 |
) |
|
Repurchase of common stock |
|
(278 |
) |
|
|
(202 |
) |
|
Proceeds from ESPP |
|
85 |
|
|
|
— |
|
|
Proceeds from the exercise of options and warrants |
|
220 |
|
|
|
845 |
|
|
Proceeds from borrowings under term loan |
|
7,450 |
|
|
|
— |
|
|
Net cash provided by/(used in) financing activities |
|
6,429 |
|
|
|
(405 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(432 |
) |
|
|
176 |
|
|
Net decrease in cash and cash equivalents |
|
(6,340 |
) |
|
|
(3,572 |
) |
|
Cash and cash equivalents-beginning of period |
|
17,128 |
|
|
|
15,366 |
|
|
Cash and cash equivalents-end of period |
$ |
10,788 |
|
|
$ |
11,794 |
|
|
Luna Innovations Incorporated |
||||||||
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted EBITDA |
||||||||
(in thousands) |
||||||||
|
|
|
||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2022 |
|
2021 |
||||
|
|
|||||||
Net income/(loss) |
$ |
9,581 |
|
|
$ |
(319 |
) |
|
Net income from discontinued operations |
|
10,924 |
|
|
|
740 |
|
|
Net loss from continuing operations |
|
(1,343 |
) |
|
|
(1,059 |
) |
|
Interest expense |
|
113 |
|
|
|
143 |
|
|
Income tax benefit |
|
(1,115 |
) |
|
|
(664 |
) |
|
Depreciation and amortization |
|
1,156 |
|
|
|
1,200 |
|
|
EBITDA |
|
(1,189 |
) |
|
|
(380 |
) |
|
Share-based compensation |
|
1,066 |
|
|
|
657 |
|
|
Integration and transaction expense |
|
1,844 |
|
|
|
886 |
|
|
Amortization of inventory step-up |
|
— |
|
|
|
168 |
|
|
Adjusted EBITDA |
$ |
1,721 |
|
|
$ |
1,331 |
|
|
Luna Innovations Incorporated |
|||||||
Reconciliation of Net Income/(Loss) to Adjusted EPS |
|||||||
(in thousands, except per share data) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2022 |
|
2021 |
||||
|
|
||||||
Net income/(loss) |
$ |
9,581 |
|
|
$ |
(319 |
) |
Net income from discontinued operations |
|
10,924 |
|
|
|
740 |
|
Net income from continuing operations |
|
(1,343 |
) |
|
|
(1,059 |
) |
Share-based compensation |
|
1,066 |
|
|
|
657 |
|
Integration and transaction expense |
|
1,844 |
|
|
|
886 |
|
Amortization of intangible assets |
|
821 |
|
|
|
826 |
|
Amortization of inventory step-up |
|
— |
|
|
|
168 |
|
Income tax effect on adjustments |
|
(933 |
) |
|
|
(634 |
) |
Adjusted income from continuing operations |
$ |
1,455 |
|
|
$ |
844 |
|
|
|
|
|
||||
|
|
|
|
||||
Adjusted EPS |
$ |
0.05 |
|
|
$ |
0.03 |
|
|
|
|
|
||||
Adjusted weighted average shares (in thousands): |
|
|
|
||||
Diluted |
|
32,243 |
|
|
|
31,351 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220516005318/en/
Contacts
Investor Contact:
Allison Woody
Phone: 540-769-8465
Email: IR@lunainc.com
