UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 2021
(Exact name of registrant as specified in its charter)
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth Company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition | ||||
On May 17, 2021 , Luna Innovations Incorporated (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2021, as well as information regarding a conference call to discuss these financial results and the Company's recent corporate highlights and outlook. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Also, on May 17, 2021 , the Company is posting an updated slide presentation on its corporate website and will be using the presentation in connection with the conference call discussed above. A copy of the presentation is furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K and Exhibits 99.1 and 99.2 attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
| Item 9.01. | Financial Statements and Exhibits | ||||
(d)Exhibits.
| Exhibit | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Luna Innovations Incorporated | ||||||||
| By: | /s/ Scott A. Graeff | |||||||
| Scott A. Graeff President and Chief Executive Officer | ||||||||
Date: May 17, 2021
Exhibit 99.1
Luna Innovations Reports First-Quarter 2021 Results
Reaffirms 2021 Outlook
Highlights
•Total revenues of $26.3 million for the three months ended March 31, 2021, up 53% compared to the three months ended March 31, 2020
•Operating loss of $0.8 million for the three months ended March 31, 2021, versus operating income of $0.4 million for the three months ended March 31, 2020; primarily due to $1.4 million of transaction related costs
•Net loss of $0.3 million for the three months ended March 31, 2021, compared to net loss of $1.1 million, for the three months ended March 31, 2020
•Adjusted EBITDA increased to $2.1 million for the three months ended March 31, 2021, compared to $1.6 million for the three months ended March 31, 2020
•Adjusted EPS of $0.03 for the three months ended March 31, 2021, compared to $0.02 for the three months ended March 31, 2020
•Company reaffirms 2021 outlook
(ROANOKE, VA, May 17, 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, 2021.
"Q1 was a busy quarter for Luna as we continue to build for our future growth,” said Scott Graeff, President and Chief Executive Officer of Luna. "I am proud of the Luna team’s relentless focus on four significant operational and systems implementation projects during the quarter. We implemented organization-wide upgrades to enterprise software, through the implementation of NetSuite and Salesforce.com, all while continuing the integration of the two acquisitions we announced toward the end of last year – OptaSense and New Ridge Technologies. I can characterize this quarter as strong blocking and tackling. And, we did all of this while continuing to grow total revenues, expanding gross margins and growing adjusted EBITDA.”
Graeff continued, “We are at another inflection point of growth, just as we were several years ago. Based on our first-quarter performance and the continued momentum we've seen in the first part of Q2, we are comfortable
reaffirming our full-year 2021 financial outlook. As always, we will continue to focus on supporting customers with excellence, delivering strong results for our shareholders, and providing a safe and supportive environment for our employees."
First-Quarter Fiscal 2021 Financial Summary
Highlights of the financial results for the three months ended March 31, 2021 are:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (in thousands, except share and per share data) | 2021 | 2020 | Change | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Lightwave | $ | 20,997 | $ | 11,554 | 82 | % | ||||||||||||||||||||
| Luna Labs | 5,302 | 5,587 | (5) | % | ||||||||||||||||||||||
| Total revenues | 26,299 | 17,141 | 53 | % | ||||||||||||||||||||||
| Gross profit | 13,429 | 8,364 | 61 | % | ||||||||||||||||||||||
| Gross margin | 51 | % | 49 | % | ||||||||||||||||||||||
| Operating expense | 14,223 | 7,974 | 78 | % | ||||||||||||||||||||||
| Operating (loss)/income | (794) | 390 | (304) | % | ||||||||||||||||||||||
| Operating margin | (3) | % | 2 | % | ||||||||||||||||||||||
| Other (expense) income and income tax benefit (expense) | 476 | (70) | 780 | % | ||||||||||||||||||||||
| Net loss | $ | (318) | $ | (1,116) | 72 | % | ||||||||||||||||||||
| Earnings per diluted share (EPS) | $ | (0.01) | $ | (0.03) | (67) | % | ||||||||||||||||||||
| Adjusted EPS | $ | 0.03 | $ | 0.02 | 50 | % | ||||||||||||||||||||
| Diluted weighted average shares outstanding | 33,353,456 | 32,549,487 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 2,148 | $ | 1,580 | 36 | % | ||||||||||||||||||||
A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable GAAP figures can be found in the schedules included in this release.
Lightwave revenues for the three months ended March 31, 2021 increased compared to the prior-year period, due primarily to increased revenues from Luna's sensing and communication test businesses. Luna Labs revenue decreased for the three months ended March 31, 2021, compared to the prior-year period, primarily due to delays caused by COVID-related issues.
Gross margin increased to 51% for the three months ended March 31, 2021, compared to 49% for the three months ended March 31, 2020, driven by increased sales in Luna's Lightwave division. Operating income and margin declined to $(0.8) million and (3)% of total revenues, respectively, for the three months ended March 31, 2021, compared to $0.4 million and 2% of total revenues, respectively, for the three months ended March 31, 2020. The decrease in operating income was primarily due to $0.9 million integration and transaction costs, as well as $0.5 million of amortization of intangible assets and inventory step-up related to Luna's recently completed acquisitions and its continuing portfolio activities.
Net loss was $0.3 million, or $0.01 per fully diluted share, for the three months ended March 31, 2021, compared to a net loss of $1.1 million, or $0.03 per fully diluted share, for the three months ended March 31, 2020. Adjusted EPS was $0.03 for the three months ended March 31, 2021, compared to $0.02 for the three months ended March 31, 2020.
Adjusted EBITDA was $2.1 million for the three months ended March 31, 2021, compared to $1.6 million for the three months ended March 31, 2020. The increase was driven by revenue growth and increased gross profit.
2021 Full-Year Outlook
Luna is reaffirming its full-year guidance:
•Total revenues of $122 million to $127 million
•Adjusted EBITDA of $16 million to $19 million
Adjusted EBITDA is a non-GAAP measure. 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, 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 5:00 pm (ET) today to discuss its financial results for the three months ended March 31, 2021. 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 4494192. 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 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 three months ended March 31, 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.
Investor Contact:
Allison Woody
Phone: 540-769-8465
Email: IR@lunainc.com
Luna Innovations Incorporated
Consolidated Balance Sheets
(in thousands, except share data)
| March 31, 2021 | December 31, 2020 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 11,794 | $ | 15,366 | |||||||
| Accounts receivable, net | 23,697 | 24,951 | |||||||||
| Contract assets | 8,328 | 7,046 | |||||||||
| Inventory | 25,550 | 23,597 | |||||||||
| Prepaid expenses and other current assets | 5,388 | 4,509 | |||||||||
| Total current assets | 74,757 | 75,469 | |||||||||
| Property and equipment, net | 3,329 | 3,308 | |||||||||
| Intangible assets, net | 19,642 | 20,109 | |||||||||
| Goodwill | 18,309 | 18,121 | |||||||||
| Long-term contract assets | — | 471 | |||||||||
| Operating lease ROU asset | 10,820 | 11,281 | |||||||||
| Finance lease ROU asset | 232 | 244 | |||||||||
| Other assets | 118 | 39 | |||||||||
| Deferred tax asset | 1,699 | 1,960 | |||||||||
| Total assets | $ | 128,906 | $ | 131,002 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Liabilities: | |||||||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt obligations | $ | 4,167 | $ | 4,167 | |||||||
| Accounts payable | 4,108 | 4,393 | |||||||||
| Accrued liabilities | 10,732 | 12,159 | |||||||||
| Contract liabilities | 6,228 | 7,095 | |||||||||
| Current portion of operating lease ROU liability | 2,195 | 2,223 | |||||||||
| Current portion of finance lease ROU liability | 48 | 48 | |||||||||
| Total current liabilities | 27,478 | 30,085 | |||||||||
| Long-term debt obligations | 14,781 | 15,817 | |||||||||
| Long-term portion of operating lease ROU liability | 9,702 | 10,248 | |||||||||
| Long-term portion of finance lease ROU liability | 184 | 196 | |||||||||
| Other long-term liabilities | 214 | 214 | |||||||||
| Total liabilities | 52,359 | 56,560 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, par value $0.001, 100,000,000 shares authorized, 33,113,774 and 32,724,512 shares issued, 31,392,989 and 31,024,537 shares outstanding at March 31, 2021 and December 31, 2020, respectively | 33 | 33 | |||||||||
Treasury stock at cost, 1,720,785 and 1,699,975 shares at March 31, 2021 and December 31, 2020, respectively | (4,991) | (4,789) | |||||||||
| Additional paid-in capital | 93,905 | 92,403 | |||||||||
| Accumulated deficit | (13,275) | (12,957) | |||||||||
| Accumulated other comprehensive income/(loss) | 875 | (248) | |||||||||
| Total stockholders’ equity | 76,547 | 74,442 | |||||||||
| Total liabilities and stockholders’ equity | $ | 128,906 | $ | 131,002 | |||||||
Luna Innovations Incorporated
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Revenues: | |||||||||||
| Lightwave | $ | 20,997 | $ | 11,554 | |||||||
| Luna Labs | 5,302 | 5,587 | |||||||||
| Total revenues | 26,299 | 17,141 | |||||||||
| Cost of revenues: | |||||||||||
| Lightwave | 8,771 | 4,885 | |||||||||
| Luna Labs | 4,099 | 3,892 | |||||||||
| Total cost of revenues | 12,870 | 8,777 | |||||||||
| Gross profit | 13,429 | 8,364 | |||||||||
| Operating expense: | |||||||||||
| Selling, general and administrative | 11,290 | 6,377 | |||||||||
| Research, development and engineering | 2,933 | 1,597 | |||||||||
| Total operating expense | 14,223 | 7,974 | |||||||||
| Operating (loss)/income | (794) | 390 | |||||||||
| Other income/(expense): | |||||||||||
| Investment income | — | 59 | |||||||||
| Other income | — | 9 | |||||||||
| Interest expense | (143) | — | |||||||||
| Total other (expense)/income | (143) | 68 | |||||||||
| (Loss)/income from continuing operations before income taxes | (937) | 458 | |||||||||
| Income tax (benefit)/expense | (619) | 138 | |||||||||
| Net (loss)/income from continuing operations | (318) | 320 | |||||||||
Loss from discontinued operations, net of income tax of $464 | — | (1,436) | |||||||||
| Net loss | (318) | (1,116) | |||||||||
| Preferred stock dividend | — | — | |||||||||
| Net loss attributable to common stockholders | $ | (318) | $ | (1,116) | |||||||
| Net (loss)/income per share from continuing operations: | |||||||||||
| Basic | $ | (0.01) | $ | 0.01 | |||||||
| Diluted | $ | (0.01) | $ | 0.01 | |||||||
| Net loss per share from discontinued operations: | |||||||||||
| Basic | $ | — | $ | (0.05) | |||||||
| Diluted | $ | — | $ | (0.04) | |||||||
| Net loss per share attributable to common stockholders: | |||||||||||
| Basic | $ | (0.01) | $ | (0.04) | |||||||
| Diluted | $ | (0.01) | $ | (0.03) | |||||||
| Weighted average shares: | |||||||||||
| Basic | 31,350,629 | 30,380,345 | |||||||||
| Diluted | 33,353,456 | 32,549,487 | |||||||||
Luna Innovations Incorporated
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows used in operating activities | |||||||||||
| Net loss | $ | (318) | $ | (1,116) | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||
| Depreciation and amortization | 1,231 | 679 | |||||||||
| Share-based compensation | 657 | 226 | |||||||||
| Bad debt expense | — | 14 | |||||||||
| Loss from discontinued operations, net of tax | — | 1,436 | |||||||||
| Deferred taxes | 262 | (127) | |||||||||
| Change in assets and liabilities | |||||||||||
| Accounts receivable | 1,439 | 737 | |||||||||
| Contract assets | (729) | 111 | |||||||||
| Inventory | (1,617) | (897) | |||||||||
| Other current assets | (847) | (287) | |||||||||
| Other long term assets | (80) | — | |||||||||
| Accounts payable and accrued expenses | (1,939) | (760) | |||||||||
| Contract liabilities | (992) | (318) | |||||||||
| Net cash used in operating activities | (2,933) | (302) | |||||||||
| Cash flows (used in)/provided by investing activities | |||||||||||
| Acquisition of property and equipment | (361) | (74) | |||||||||
| Intangible property costs | (48) | (91) | |||||||||
| Proceeds from sale of discontinued operations | — | 600 | |||||||||
| Net cash (used in)/provided by investing activities | (409) | 435 | |||||||||
| Cash flows (used in)/provided by financing activities | |||||||||||
| Payments on finance lease obligations | (12) | (13) | |||||||||
| Payments of debt obligations | (1,036) | — | |||||||||
| Repurchase of common stock | (202) | — | |||||||||
| Proceeds from the exercise of options and warrants | 845 | 1,198 | |||||||||
| Net cash (used in)/provided by financing activities | (405) | 1,185 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (3,747) | 1,318 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 175 | — | |||||||||
| Cash and cash equivalents-beginning of period | 15,366 | 25,006 | |||||||||
| Cash and cash equivalents-end of period | $ | 11,794 | $ | 26,324 | |||||||
Luna Innovations Incorporated
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net loss | $ | (318) | $ | (1,116) | |||||||
| Loss from discontinued operations, net of income taxes | — | (1,436) | |||||||||
| Net income from continuing operations | (318) | 320 | |||||||||
| Interest expense | 143 | — | |||||||||
| Investment income | — | (59) | |||||||||
| Income tax (benefit)/expense | (619) | 138 | |||||||||
| Depreciation and amortization | 1,231 | 679 | |||||||||
| EBITDA | 437 | 1,078 | |||||||||
| Share-based compensation | 657 | 502 | |||||||||
| Integration and transaction expense | 886 | — | |||||||||
| Amortization of inventory step-up | 168 | — | |||||||||
| Adjusted EBITDA | $ | 2,148 | $ | 1,580 | |||||||
Luna Innovations Incorporated
Reconciliation of Net Income to Adjusted EPS
(in thousands)
| Three months ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net loss | $ | (318) | (1,116) | ||||||||
| Loss from discontinued operations, net of income taxes | — | (1,436) | |||||||||
| Net (loss)/income from continuing operations | (318) | 320 | |||||||||
| Share-based compensation | 657 | 502 | |||||||||
| Integration and deal expense | 886 | — | |||||||||
| Amortization of inventory step-up | 168 | — | |||||||||
| Income tax effect on adjustments | (428) | (126) | |||||||||
| Adjusted income from continuing operations | $ | 965 | $ | 696 | |||||||
| Adjusted EPS | $ | 0.03 | $ | 0.02 | |||||||
| Adjusted weighted average shares (in thousands): | |||||||||||
| Diluted | 33,353 | 32,549 | |||||||||
###
First-quarter 2021 Results Investor Supplemental Materials May 17th, 2021
NASDAQ: LUNA Luna Innovations Incorporated© 2021 2 Safe Harbor Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This presentation includes information that constitutes “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 the company's expectations regarding the company's future financial performance, including 2021 guidance, and the market and potential demand for its products, the company's growth potential, its balance sheet and capitalization and access to capital, its technological advantages and capabilities, its strategic position, and corporate culture. 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 the company 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 the company’s products and services to meet expectations, failure of target markets to grow and expand, technological, operational and strategic challenges, uncertainties related to the ultimate impact of the COVID-19 pandemic and those risks and uncertainties set forth in the company’s periodic reports and other filings with the Securities and Exchange Commission ("SEC"). Such filings are available on the SEC’s website at www.sec.gov and on the company’s website at www.lunainc.com. The statements made in this presentation are based on information available to Luna as of the date of this presentation, May 17, 2021, and Luna undertakes no obligation to update any of the forward-looking statements after the date of this presentation, except as required by law. Adjusted Financial Measures In addition to U.S. GAAP financial information, this presentation includes Adjusted EBITDA, a non-GAAP financial measure. This non-GAAP financial measure is in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of Adjusted EBITDA to Net Income is included in the appendix to this presentation.
1Q FY21 Results
NASDAQ: LUNA Luna Innovations Incorporated© 2021 4 First-quarter 2021: Key Financial Results Total revenues of $26.3M; up 53% year-over-year Lightwave revenue of $21.0M, up 82% year-over-year Luna Labs revenue of $5.3M, down 5% year-over-year Gross Margin increased to 51%, compared to 49% for the prior-year period Operating loss of $0.8M, compared to operating income of $0.4M for the prior-year period Loss largely due to: • $0.9M integration and transaction related costs • $0.5M amortization of intangibles and inventory step-up related to our 2020 acquisitions Adjusted EBITDA of $2.1M, compared to $1.6M for the prior-year period Adjusted EPS of $0.03, compared to $0.02 for the prior-year period 1Adj EPS and EBITDA are a non-GAAP measures. Reconciliation of comparable GAAP measures to non-GAAP measures are included in the appendix to this presentation.
NASDAQ: LUNA Luna Innovations Incorporated© 2021 5 First-quarter 2021 Highlights Total Lightwave revenues up >80% Legacy Lightwave revenues increased double-digit vs. prior-year quarter Traction and customer orders remain strong: Large ODiSi (sensing product) order from defense contractor Key strategic wins for Terahertz products in process control markets OBR 6200 sales (comms test) OptaSense, a leader in distributed acoustic sensing, operating as stand-alone company in 2021, with key services provided through TSAs for first six months; functional integration begins after first year Employees transitioned / in transition to Luna systems Mapping of OptaSense accounts to Luna complete Financial and IT systems integration ongoing Integration of New Ridge Technologies largely completed
NASDAQ: LUNA Luna Innovations Incorporated© 2021 6 $0.3 $9.5 $2.1 FY17 FY18 FY19 FY20 FY21 Adjusted EBITDA1 (millions) $3.1 $33.1 $42.9 $70.5 $26.3 FY17 FY18 FY19 FY20 FY21 Revenue (millions) $82.7 Strong Financial Results 1 Adj EBITDA is a non-GAAP measure. Reconciliation of comparable GAAP measures to non-GAAP measures are included in the appendix to this presentation. FY21 Guidance: $122.0 - $127.0 FY21 Guidance: $16.0 to $19.0 $13.1
NASDAQ: LUNA Luna Innovations Incorporated© 2021 7 A Flexible Balance Sheet Strong balance sheet on March 31, 2021: $129.1M in total assets • $11.8M in cash and cash equivalents • $47.3M in working capital Total debt of $18.9M outstanding $11.4M in term debt $7.5M drawn on revolver • $7.5M available Allows us to deploy our capital to generate long-term sustainable growth by increasing organic sales, reinvesting in our business and identifying inorganic opportunities
NASDAQ: LUNA Luna Innovations Incorporated© 2021 8 2021 Financial Outlook Reaffirming FY 2021 outlook: Total revenues of $122M to $127M Adjusted EBITDA1 of $16M to $19M Continue to forecast revenue split 44%-46% First 6 Months / 56%-54% Second 6 Months 1 Adj EBITDA is a non-GAAP measure. Reconciliation of comparable GAAP measures to non-GAAP measures are included in the appendix to this presentation. The outlook above does not include any future acquisitions, divestitures, or unanticipated events.
NASDAQ: LUNA Luna Innovations Incorporated© 2021 9 Luna – Enabling the Future with Fiber Positioned as a global fiber optic leader Proprietary measurement technology, offering unprecedented combination of resolution, accuracy and speed Customers in attractive markets: Military and Defense, Communications, Infrastructure, Energy, Automotive and Aerospace Positioned to take advantage of trends such as vehicle lightweighting, smart infrastructure, and increasing demands on data centers and broadband capacity Adequately capitalized to fund growth Long-tenured, experienced executive team / board Corporate culture of innovation and integrity Overview
Appendix
NASDAQ: LUNA Luna Innovations Incorporated© 2021 11 Reconciliation of Net Income to Adjusted EBITDA 2021 2020 Reconciliation of EBITDA and Adjusted EBITDA Net loss (318)$ (1,116)$ Loss from discontinued operations, net of income tax benefit of $464 - 1,436 Net income from continuing operations (318) 320 Interest expense 143 - Investment income - (59) Income tax (benefit)/expense (619) 138 Depreciation and amortization 1,231 679 EBITDA 437 1,078 Share-based compensation 657 502 Integration and transaction expense 886 - Amortization of Inventory step-up 168 - Adjusted EBITDA 2,148$ 1,580$ Luna Innovations Incorporated Reconciliation of Non-GAAP Financial Measures Three Months Ended March 31, (Unaudited) (in thousands)
NASDAQ: LUNA Luna Innovations Incorporated© 2021 12 Reconciliation of Net Income to Adjusted EPS 2021 2020 Reconciliation of Net Income to Adjusted EPS GAAP (loss)/income from continuing operations (318)$ 320$ Adjustments: Share-based Compensation 657 502 Integration and transaction expense 886 Amortization of Inventory Step-up 168 - Total adjustments: 1,711 502 Income tax adjustment - benefit (expense) (428) (126) Adjusted (loss)/income from continuing operations 965$ 697$ Adjusted EPS 0.03$ 0.02$ Adjusted weighted average shares (in thousands): Diluted 33,353 32,549 (Unaudited) Luna Innovations Incorporated Reconciliation of Non-GAAP Financial Measures (in thousands) Three Months Ended March 31,
NASDAQ: LUNA Luna Innovations Incorporated© 2021 13 Historical Quarterly Results March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 A March 31, 2021 B Revenues: Lightwave 11,554$ 12,933$ 15,350$ 19,278$ 20,997$ Luna Labs 5,587 5,642 5,700 6,637 5,302 Total revenues 17,141 18,576 21,050 25,915 26,299 Cost of revenues: Lightwave 4,885 5,181 5,670 7,570 8,771 Luna Labs 3,892 3,878 4,431 4,986 4,099 Total cost of revenues 8,777 9,059 10,101 12,556 12,870 Gross Profit 8,364 9,517 10,949 13,359 13,429 Operating expense: Selling, general and administrative 6,377 6,202 6,505 8,559 10,404 Research, development and engineering 1,597 1,505 1,616 1,996 2,933 Acquisition related expense - - - 2,204 886 Loss on sale and disposal of property and equipment - - 576 69 - Total operating expense 7,974 7,707 8,697 12,828 14,223 Operating income/(loss) 390$ 1,810$ 2,252$ 531$ (794)$ A Includes $2,204 of costs associated with the acquisition of OptaSense. B Includes $886 of OptaSense integration and other deal related costs. (in thousands) Three Months Ended