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Luna Innovations reports ‘record’ Q4 and 2019 results

06 Mar 2020

"Exceptional year from financial and operational perspectives," says CEO Scott Graeff.

Luna Innovations, a developer of advanced optical technology, has announced what it calls "record" financial results for the three months and fiscal year that ended December 31, 2019.

"2019 marked an exceptional year for Luna, from both a financial and an operational perspective, and was our ninth consecutive quarter, and our second full fiscal year, of significant growth," commented Scott Graeff, President and CEO.

Luna manufactures high-performance, fiber optic-based, test products for the telecommunications industry and distributed fiber optic-based sensing for the aerospace and automotive industries. The company is organized into two business segments: Technology Development and Products & Licensing, which work together "to turn ideas into products".

Business highlights

  • Total revenues of $19.5 million for the quarter ended December, 2019, up 44% compared to equivalent quarter in 2018.
  • Products and licensing revenues of $13.0 million for the quarter ended December, 2019, up 63% compared to equivalent quarter in 2018.
  • Net income from continuing operations of $2.1 million for the quarter ended December, 2019, ($(0.1) million for equivalent quarter in 2018).
  • Adjusted pre-tax earnings improved to $3.2 million for the quarter ended December, 2019, ($1.6 million for the quarter ended December, 2018).
  • Fiscal 2019 total revenues of $5 million; adjusted EBITDA more than triples over prior year.

"During the year, we achieved record revenue and income from continuing operations while streamlining our balance sheet through a conversion of preferred shares. We completed a $2 million stock repurchase program and realigned the organization for future growth, including the appointment of Gene Nestro as CFO."

"I am particularly struck by the efficient integration of our two recent acquisitions, Micron Optics and General Photonics, and the immediate accretive effects they have made. Our customers recognize and appreciate our performance, as reflected by our strong 2019 results. We look forward to an even stronger 2020."

Q4 and full-year summary

Luna stated that results for Q4, which ended December 31, 2019, "continue the strong momentum from throughout the fiscal year." These include a full quarter of the business of General Photonics (GP), acquired in March 2019; fourth quarter 2018 did not include GP.

Products and licensing revenue for Q4, 2019, increased compared to the prior year period due to the inclusion of the incremental revenues associated with the acquired operations of GP, as well as increased revenues associated with Luna's communications test and fiber optic sensing products.

Technology development revenues increased for Q4, 2019, compared to the prior-year period due to growth in various government research programs. Pre-tax income from continuing operations increased to $1.8 million in Q4, 2019, compared to $0.6 million for the prior year equivalent.

Net income from continuing operations was $2.1 million for Q4, 2019, compared to a loss of $0.1 million for the prior-year period. The increase in net income from continuing operations was driven by increased revenue and strong operating results. Adjusted pre-tax earnings totaled $3.2 million for Q4, 2019, compared to $1.6 million for the prior year equivalent. Growth was driven by revenue growth from both Luna's legacy business and the MOI and GP acquisitions, as well as prudent expense management.

2020 outlook

For fiscal year 2020, Luna said it is expecting the following financial outcomes:

  • Total revenues in the range of $81 million to $84 million for full fiscal 2020; and
  • Adjusted EBITDA in the range of $10 million to $12 million for full fiscal 2020.
  • Luna is not providing an outlook for 2020 net income.

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