EX-99.1 2 ex991pressrelease2021930.htm EX-99.1 Document


Exhibit 99.1

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Luna Innovations Reports Third-Quarter 2021 Results
Luna Labs moved to Discontinued Operations

Highlights
The following highlights reflect the reclassification of Luna Labs to discontinued operations:
•Total revenues of $20.3 million for the three months ended September 30, 2021, up 32% compared to the three months ended September 30, 2020
•Gross margin of 62% for the three months ended September 30, 2021, compared to 63% for the three months ended September 30, 2020
•Operating loss of $10 thousand for the three months ended September 30, 2021, compared to operating income of $1.2 million for the three months ended September 30, 2020
•Net income of $0.4 million for the three months ended September 30, 2021, compared to net income of $3.1 million for the three months ended September 30, 2020
•Adjusted EBITDA of $2.1 million for the three months ended September 30, 2021, compared to $3.1 million for the three months ended September 30, 2020
•Adjusted EPS of $0.03 for the three months ended September 30, 2021, compared to $0.11 for the three months ended September 30, 2020

(ROANOKE, VA, November 15, 2021) - Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in advanced optical technology, today announced its financial results for the three and nine months ended September 30, 2021.

"Q3 was a record quarter for customer demand of our products, as we realized the highest level of bookings we've ever had," said Scott Graeff, President and Chief Executive Officer of Luna. "The largest backlog in our history is the result of record bookings, the increased impact of COVID and industry-wide supply chain challenges which have slowed our ability to deliver products. As a result, revenue for the year will be lighter than what we could have delivered. We believe that this is a temporary situation and remain committed to Luna's strategy. We continue to see vast opportunities for Luna in fiber optic technologies and are pleased to take the pivotal step in focusing on fiber with our transition of Luna Labs to discontinued operations. We have evaluated a number of opportunities and look forward to sharing Luna's meaningful achievements over the coming months."




Third-Quarter Fiscal 2021 Financial Summary
Highlights of the financial results for the three months ended September 30, 2021 are:
Three Months Ended September 30,Change
(in thousands, except share and per share data)20212020
Revenues$20,329 $15,350 32 %
Gross profit12,584 9,632 31 %
Gross margin62 %63 %
Operating expense12,594 8,420 50 %
Operating (loss)/income(10)1,212 
Operating margin— %8 %
Other (expense)/income and income tax benefit/(expense)(334)1,096 
Net (loss)/income from continuing operations$(344)$2,308 
Income from discontinued operations, net of income tax of $235 and $247
699 794 
Net income$355 $3,102 (89)%
Earnings per diluted share (EPS)$0.01 $0.10 (90)%
Adjusted EPS$0.03 $0.11 (73)%
Diluted weighted average shares outstanding33,780,714 32,411,086 
Adjusted EBITDA$2,110 $3,144 (33)%

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 September 30, 2021 increased compared to the prior-year period, primarily due to revenue generated by the businesses we have recently acquired over the last year.

Gross margin decreased to 62% for the three months ended September 30, 2021, compared to 63% for the three months ended September 30, 2020, driven primarily by product mix. Operating loss and margin declined to $10 thousand and less than 1% of total revenues, respectively, for the three months ended September 30, 2021, compared to $1.2 million and 8% of total revenues, respectively, for the three months ended September 30, 2020. The decrease in operating income was primarily due to an increase in operating expenses and amortization related to our recent acquisitions.



Net income was $0.4 million, or $0.01 per fully diluted share, for the three months ended September 30, 2021, compared to net income of $3.1 million, or $0.10 per fully diluted share, for the three months ended September 30, 2020. Adjusted EPS was $0.03 for the three months ended September 30, 2021 compared to $0.11 for the three months ended September 30, 2020.

Adjusted EBITDA was $2.1 million for three months ended September 30, 2021, compared to $3.1 million for the three months ended September 30, 2020. The decrease was driven by lower income from continuing operations.




Nine Months Ended Fiscal 2021 Financial Summary
Highlights of the financial results for the nine months ended September 30, 2021 are:
Nine months ended September 30,Change
(in thousands, except share and per share data)20212020
Revenues$63,291 $39,837 59 %
Gross profit37,436 24,126 55 %
Gross margin59 %61 %
Operating expense41,061 23,252 77 %
Operating (loss)/income(3,625)874 
Operating margin(6)%2 %
Other (expense)/income and income tax benefit/(expense)1,061 1,012 5 %
Net (loss)/income from continuing operations$(2,564)$1,886 
Income from discontinued operations, net of income tax of $381 and $209
2,371 1,469 
Net (loss)/income$(193)$3,355 
Earnings per diluted share (EPS)$(0.01)$0.10 
Adjusted EPS$0.08 $0.14 (43)%
Diluted weighted average shares outstanding33,585,973 32,478,625 
Adjusted EBITDA$4,461 $4,990 (11)%

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 nine months ended September 30, 2021 increased compared to the prior-year period, primarily due to our recent acquisitions.

Gross margin of 59% for the nine months ended September 30, 2021 was down compared to 61% for the nine months ended September 30, 2020 due to product mix. Operating loss and margin declined to $3.6 million and (6)% of total revenues, respectively, for the nine months ended September 30, 2021, compared to $0.9 million and 2% of total revenues, respectively, for the nine months ended September 30, 2020. The decrease in operating income was primarily due to $2.1 million of integration and transaction costs, as well as $1.6 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 $0.2 million, or $(0.01) per fully diluted share, for the nine months ended September 30, 2021, compared to a net income of $3.4 million, or $0.10 per fully diluted share, for the nine months ended September 30, 2020. Adjusted EPS was $0.08 for the nine months ended September 30, 2021, compared to $0.14 for the nine months ended September 30, 2020.

Adjusted EBITDA was $4.5 million for the nine months ended September 30, 2021, compared to $5.0 million for the nine months ended September 30, 2020.

2021 Full-Year Outlook
Luna is revising guidance to reflect the reclassification of Luna Labs to discontinued operations and COVID-19 pandemic related issues:
•Total revenue of $85 million to $88 million
•Adjusted EBITDA of $6 million to $8 million

Adjusted EBITDA is a non-GAAP measure. Luna is not providing an outlook for net income/(loss), 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 5:00 pm (ET) today to discuss its financial results for the three and nine months ended September 30, 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 6088397. 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 2021 financial results and outlook, the Company's growth potential, the resolution of backlog and supply chain challenges and the potential sale 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, 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 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.
Investor Contact:
Allison Woody
Phone: 540-769-8465
Email: IR@lunainc.com


Luna Innovations Incorporated
Consolidated Balance Sheets
 (in thousands, except share data)
September 30, 2021December 31, 2020
 (unaudited)
Assets
Current assets:
Cash and cash equivalents$14,755 $15,366 
Accounts receivable, net19,557 21,928 
Contract assets2,883 4,139 
Inventory25,350 23,062 
Prepaid expenses and other current assets6,213 4,433 
Assets held for sale13,855 6,541 
Total current assets82,613 75,469 
Property and equipment, net2,820 2,917 
Intangible assets, net17,819 19,994 
Goodwill18,979 18,121 
Operating lease right-of-use asset5,497 5,984 
Other non-current assets246 369 
Deferred tax asset1,707 1,689 
Non-current assets held for sale— 6,459 
Total assets$129,681 $131,002 
Liabilities and stockholders’ equity
Liabilities:
Current liabilities:
Current portion of long-term debt obligations$4,167 $4,167 
Accounts payable2,585 2,852 
Accrued and other current liabilities10,826 10,773 
Contract liabilities4,967 6,698 
Current portion of operating lease liability2,020 1,876 
Liabilities associated with assets held for sale9,091 3,719 
Total current liabilities33,656 30,085 
Long-term debt obligations12,709 15,817 
Long-term portion of operating lease liability4,073 5,034 
Other long-term liabilities374 410 
Non-current liabilities associated with assets held for sale— 5,214 
Total liabilities50,812 56,560 
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.001, 100,000,000 shares authorized, 33,511,899 and 32,724,512 shares issued, 31,961,907 and 31,024,537 shares outstanding at September 30, 2021 and December 31, 2020, respectively
34 33 
Treasury stock at cost, 1,739,455 and 1,699,975 shares at September 30, 2021 and December 31, 2020, respectively
(5,209)(4,789)
Additional paid-in capital97,238 92,403 
Accumulated deficit(13,150)(12,957)
Accumulated other comprehensive loss(44)(248)
Total stockholders’ equity78,869 74,442 
Total liabilities and stockholders’ equity$129,681 $131,002 


Luna Innovations Incorporated
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenues$20,329 $15,350 $63,291 $39,837 
Cost of revenues7,745 5,718 25,855 15,711 
Gross profit12,584 9,632 37,436 24,126 
Operating expense:
Selling, general and administrative9,674 6,229 33,414 17,959 
Research, development and engineering2,920 1,615 7,647 4,717 
Loss on sale of property and equipment— 576 — 576 
Total operating expense12,594 8,420 41,061 23,252 
Operating (loss)/income(10)1,212 (3,625)874 
Other (expense)/income:
Investment income— 1 — 65 
Other income— 13 — 19 
Interest expense(110)(1)(375)(2)
Total other (expense)/income(110)13 (375)82 
(Loss)/income from continuing operations before income taxes(120)1,225 (4,000)956 
Income tax expense/(benefit)224 (1,083)(1,436)(930)
Net (loss)/income from continuing operations(344)2,308 (2,564)1,886 
Income from discontinued operations, net of income tax of $235, $246, $381, and $673
699 794 2,371 1,469 
Net income/(loss)$355 $3,102 $(193)$3,355 
Net (loss)/income per share from continuing operations:
Basic$(0.01)$0.07 $(0.08)$0.06 
Diluted$(0.01)$0.07 $(0.08)$0.06 
Net income per share from discontinued operations:
Basic$0.02 $0.03 $0.08 $0.05 
Diluted$0.02 $0.02 $0.07 $0.05 
Net income/(loss) per share attributable to common stockholders:
Basic$0.01 $0.10 $(0.01)$0.11 
Diluted$0.01 $0.10 $(0.01)$0.10 
Weighted average shares:
Basic31,944,869 30,809,896 31,553,998 30,593,954 
Diluted33,780,714 32,411,086 33,585,973 32,478,625 


Luna Innovations Incorporated
Consolidated Statements of Cash Flows (Unaudited)
 (in thousands)
 Nine Months Ended September 30,
 20212020
Cash flows provided by operating activities
Net (loss)/income$(193)$3,355 
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities
Depreciation and amortization3,523 2,126 
Share-based compensation2,230 1,538 
Bad debt expense262 147 
Loss on sale of property and equipment— 576 
Loss from discontinued operations, net of tax— 1,436 
                Deferred taxes(23)(313)
Change in assets and liabilities
Accounts receivable220 (2,131)
Contract assets837 (1,589)
Inventory(1,906)(1,419)
Other current assets(1,752)(1,982)
Accounts payable and accrued expenses(1,681)(1,481)
Contract liabilities(287)(166)
Net cash provided by operating activities1,230 97 
Cash flows (used in)/provided by investing activities
Acquisition of property and equipment(943)(422)
Intangible property costs(215)(291)
Proceeds from sale of property and equipment— 403 
Proceeds from sale of discontinued operations— 600 
Net cash (used in)/provided by investing activities(1,158)290 
Cash flows (used in)/provided by financing activities
Payments on finance lease obligations(36)(39)
Payments of debt obligations(3,110)— 
Repurchase of common stock(420)(329)
Proceeds from ESPP530 — 
Proceeds from the exercise of options and warrants2,076 1,397 
Net cash (used in)/provided by financing activities(960)1,029 
Effect of exchange rate changes on cash and cash equivalents277 — 
Net (decrease)/increase in cash and cash equivalents(611)1,416 
Cash and cash equivalents-beginning of period15,366 25,006 
Cash and cash equivalents-end of period$14,755 $26,422 


Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted EBITDA
 (in thousands)

Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net income/(loss)$355 $3,102 $(193)$3,355 
Income from discontinued operations, net of tax699 794 2,371 1,469 
Net (loss)/income from continuing operations(344)2,308 (2,564)1,886 
Interest expense110 1 375 2 
Investment income— (1)— (65)
Income tax expense/(benefit)224 (1,083)(1,436)(930)
Depreciation and amortization1,131 709 3,440 1,979 
EBITDA1,121 1,934 (185)2,872 
Share-based compensation689 542 2,133 1,450 
Integration and transaction expense196 — 2,073 — 
Loss on sale of property and moving related expenses— 668 — 668 
Amortization of inventory step-up104 — 440 — 
Adjusted EBITDA$2,110 $3,144 $4,461 $4,990 


Luna Innovations Incorporated
Reconciliation of Net Income/(Loss) to Adjusted EPS
(in thousands, except per share data)

Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 
Net income/(loss) $355 $3,102 $(193)$3,355 
Income from discontinued operations, net of tax699 794 2,371 1,469 
Net (loss)/income from continuing operations(344)2,308 (2,564)1,886 
Share-based compensation689 542 2,133 1,450 
Integration and deal expense196 — 2,073 — 
Amortization of intangible assets761 424 2,353 1,236 
Amortization of inventory step-up104 — 440 — 
Loss on sale of property and moving related expenses— 668 — 668 
Income tax effect on adjustments(438)(409)(1,750)(839)
Adjusted income from continuing operations$968 $3,533 $2,685 $4,401 
Adjusted EPS $0.03 $0.11 $0.08 $0.14 
Adjusted weighted average shares (in thousands):
Diluted33,781 32,411 33,586 32,479 
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