EX-99.1 2 ex991pressrelease2021331.htm EX-99.1 Document


Exhibit 99.1

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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)20212020Change
Revenues:
Lightwave$20,997 $11,554 82 %
Luna Labs5,302 5,587 (5)%
   Total revenues26,299 17,141 53 %
Gross profit13,429 8,364 61 %
Gross margin51 %49 %
Operating expense14,223 7,974 78 %
Operating (loss)/income(794)390 (304)%
Operating margin(3)%2 %
Other (expense) income and income tax benefit (expense)476 (70)780 %
Net loss$(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 outstanding33,353,456 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, 2021December 31, 2020
 (unaudited)
Assets
Current assets:
Cash and cash equivalents$11,794 $15,366 
Accounts receivable, net23,697 24,951 
Contract assets8,328 7,046 
Inventory25,550 23,597 
Prepaid expenses and other current assets5,388 4,509 
Total current assets74,757 75,469 
Property and equipment, net3,329 3,308 
Intangible assets, net19,642 20,109 
Goodwill18,309 18,121 
Long-term contract assets— 471 
Operating lease ROU asset10,820 11,281 
Finance lease ROU asset232 244 
Other assets118 39 
Deferred tax asset1,699 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 payable4,108 4,393 
Accrued liabilities10,732 12,159 
Contract liabilities6,228 7,095 
Current portion of operating lease ROU liability2,195 2,223 
Current portion of finance lease ROU liability48 48 
Total current liabilities27,478 30,085 
Long-term debt obligations14,781 15,817 
Long-term portion of operating lease ROU liability9,702 10,248 
Long-term portion of finance lease ROU liability184 196 
Other long-term liabilities214 214 
Total liabilities52,359 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 capital93,905 92,403 
Accumulated deficit(13,275)(12,957)
Accumulated other comprehensive income/(loss)875 (248)
Total stockholders’ equity76,547 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,
 20212020
Revenues:
Lightwave$20,997 $11,554 
Luna Labs5,302 5,587 
Total revenues26,299 17,141 
Cost of revenues:
Lightwave8,771 4,885 
Luna Labs4,099 3,892 
Total cost of revenues12,870 8,777 
Gross profit13,429 8,364 
Operating expense:
Selling, general and administrative11,290 6,377 
Research, development and engineering2,933 1,597 
Total operating expense14,223 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:
Basic31,350,629 30,380,345 
Diluted33,353,456 32,549,487 


Luna Innovations Incorporated
Consolidated Statements of Cash Flows (Unaudited)
 (in thousands)
 Three Months Ended March 31,
 20212020
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 amortization1,231 679 
Share-based compensation657 226 
Bad debt expense— 14 
Loss from discontinued operations, net of tax— 1,436 
                Deferred taxes262 (127)
Change in assets and liabilities
Accounts receivable1,439 737 
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 warrants845 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 equivalents175 — 
Cash and cash equivalents-beginning of period15,366 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,
 20212020
Net loss$(318)$(1,116)
Loss from discontinued operations, net of income taxes — (1,436)
Net income from continuing operations(318)320 
Interest expense143 — 
Investment income— (59)
Income tax (benefit)/expense(619)138 
Depreciation and amortization1,231 679 
EBITDA437 1,078 
Share-based compensation657 502 
Integration and transaction expense886 — 
Amortization of inventory step-up168 — 
Adjusted EBITDA$2,148 $1,580 


Luna Innovations Incorporated
Reconciliation of Net Income to Adjusted EPS
(in thousands)

Three months ended 
 March 31,
 20212020
 
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 compensation657 502 
Integration and deal expense886 — 
Amortization of inventory step-up168 — 
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):
Diluted33,353 32,549 
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