Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 10, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-52008 | |
Entity Registrant Name | LUNA INNOVATIONS INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 54-1560050 | |
Entity Address, Address Line One | 301 First Street SW | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Roanoke | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 24011 | |
City Area Code | 540 | |
Local Phone Number | 769-8400 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | LUNA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 33,958,641 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001239819 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 6,028 | $ 6,024 |
Accounts receivable, net | 39,304 | 33,249 |
Contract assets | 7,324 | 7,691 |
Inventory | 43,318 | 36,582 |
Prepaid expenses and other current assets | 4,207 | 4,328 |
Total current assets | 100,181 | 87,874 |
Property and equipment, net | 4,892 | 4,893 |
Intangible assets, net | 16,143 | 18,750 |
Goodwill | 26,896 | 26,927 |
Operating lease right-of-use assets | 7,999 | 4,661 |
Other non-current assets | 3,338 | 3,255 |
Deferred tax asset | 5,645 | 4,647 |
Total assets | 165,094 | 151,007 |
Current liabilities: | ||
Current portion of long-term debt obligations | 3,000 | 2,500 |
Accounts payable | 10,617 | 8,109 |
Accrued and other current liabilities | 14,705 | 16,694 |
Contract liabilities | 4,619 | 4,089 |
Current portion of operating lease liabilities | 2,069 | 2,239 |
Total current liabilities | 35,010 | 33,631 |
Long-term debt obligations, net of current portion | 28,887 | 20,726 |
Long-term portion of operating lease liabilities | 6,178 | 2,804 |
Other long-term liabilities | 407 | 444 |
Total liabilities | 70,482 | 57,605 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Common stock, par value $0.001, 100,000,000 shares authorized, 35,781,127 and 34,901,954 shares issued, 33,943,453 and 33,105,080 shares outstanding at September 30, 2023 and December 31, 2022, respectively | 36 | 35 |
Treasury stock at cost, 1,837,674 and 1,796,862 shares at September 30, 2023 and December 31, 2022, respectively | (6,043) | (5,607) |
Additional paid-in capital | 109,634 | 104,893 |
Accumulated deficit | (5,273) | (2,296) |
Accumulated other comprehensive loss | (3,742) | (3,623) |
Total stockholders’ equity | 94,612 | 93,402 |
Total liabilities and stockholders’ equity | $ 165,094 | $ 151,007 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock issued (in shares) | 35,781,127 | 34,901,954 |
Common stock outstanding (in shares) | 33,943,453 | 33,105,080 |
Treasury stock (in shares) | 1,837,674 | 1,796,862 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 30,703 | $ 29,153 | $ 84,912 | $ 77,795 |
Cost of revenue | 13,074 | 12,234 | 35,445 | 30,633 |
Gross profit | 17,629 | 16,919 | 49,467 | 47,162 |
Operating expense: | ||||
Selling, general and administrative | 12,829 | 11,678 | 39,565 | 39,733 |
Research, development and engineering | 2,719 | 2,776 | 8,257 | 7,983 |
Amortization of intangible assets | 929 | 987 | 2,839 | 2,794 |
Total operating expense | 16,477 | 15,441 | 50,661 | 50,510 |
Operating income/(loss) | 1,152 | 1,478 | (1,194) | (3,348) |
Other income/(expense): | ||||
Other income | 115 | 73 | 98 | 146 |
Interest expense, net | (613) | (218) | (1,566) | (442) |
Total other expense, net | (498) | (145) | (1,468) | (296) |
Income/(loss) from continuing operations before income taxes | 654 | 1,333 | (2,662) | (3,644) |
Income tax expense/(benefit) | 193 | 165 | (723) | (527) |
Net income/(loss) from continuing operations | 461 | 1,168 | (1,939) | (3,117) |
Income/(loss) from discontinued operations, net of income tax expense/(benefit) of $—, $(78), $(346), and $3,205. | 0 | 28 | (1,038) | 622 |
Gain on sale of discontinued operations, net of tax of $3,117 | 0 | 0 | 0 | 10,921 |
Net income/(loss) from discontinued operations | 0 | 28 | (1,038) | 11,543 |
Net income/(loss) | $ 461 | $ 1,196 | $ (2,977) | $ 8,426 |
Net income/(loss) per share from continuing operations: | ||||
Basic (in dollars per share) | $ 0.01 | $ 0.04 | $ (0.06) | $ (0.10) |
Diluted (in dollars per share) | 0.01 | 0.03 | (0.06) | (0.10) |
Net income/(loss) per share from discontinued operations: | ||||
Basic (in dollars per share) | 0 | 0 | (0.03) | 0.36 |
Diluted (in dollars per share) | 0 | 0 | (0.03) | 0.36 |
Net income/(loss) per share attributable to common stockholders: | ||||
Basic (in dollars per share) | 0.01 | 0.04 | (0.09) | 0.26 |
Diluted (in dollars per share) | $ 0.01 | $ 0.04 | $ (0.09) | $ 0.26 |
Weighted average shares: | ||||
Basic (in shares) | 33,917,700 | 32,800,690 | 33,631,654 | 32,492,276 |
Diluted (in shares) | 35,218,547 | 34,104,850 | 33,631,654 | 32,492,276 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Discontinued operations tax effect | $ 0 | $ (78) | $ (346) | $ 3,205 |
Tax effect | $ 3,117 | $ 3,117 | $ 3,117 | $ 3,117 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss)/Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income/(loss) | $ 461 | $ 1,196 | $ (2,977) | $ 8,426 |
Other comprehensive loss | (1,564) | (3,124) | (119) | (6,721) |
Total other comprehensive (loss)/income | $ (1,103) | $ (1,928) | $ (3,096) | $ 1,705 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Common stock, beginning balance (in shares) at Dec. 31, 2021 | 32,116,270 | |||||
Beginning balance treasury stock (in shares) at Dec. 31, 2021 | 1,744,026 | |||||
Beginning balance at Dec. 31, 2021 | $ 81,923 | $ 34 | $ (5,248) | $ 98,745 | $ (11,575) | $ (33) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options (in shares) | 442,450 | |||||
Exercise of stock options | 1,161 | $ 1 | 1,160 | |||
Share-based compensation (in shares) | 246,627 | |||||
Share-based compensation | 2,838 | 2,838 | ||||
ESPP issuance (in shares) | 101,454 | |||||
ESPP issuance | 521 | 521 | ||||
Purchase of treasury stock (in shares) | 40,931 | 40,931 | ||||
Purchase of treasury stock | (294) | $ (294) | ||||
Net income/(loss) | 8,426 | 8,426 | ||||
Foreign currency translation adjustment | (6,721) | (6,721) | ||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 32,865,870 | |||||
Ending balance treasury stock (in shares) at Sep. 30, 2022 | 1,784,957 | |||||
Ending balance at Sep. 30, 2022 | 87,854 | $ 35 | $ (5,542) | 103,264 | (3,149) | (6,754) |
Common stock, beginning balance (in shares) at Jun. 30, 2022 | 32,752,348 | |||||
Beginning balance treasury stock (in shares) at Jun. 30, 2022 | 1,784,957 | |||||
Beginning balance at Jun. 30, 2022 | 88,561 | $ 35 | $ (5,542) | 102,043 | (4,345) | (3,630) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options (in shares) | 82,018 | |||||
Exercise of stock options | 3 | 3 | ||||
Share-based compensation (in shares) | 31,504 | |||||
Share-based compensation | 1,218 | 1,218 | ||||
Net income/(loss) | 1,196 | 1,196 | ||||
Foreign currency translation adjustment | (3,124) | (3,124) | ||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 32,865,870 | |||||
Ending balance treasury stock (in shares) at Sep. 30, 2022 | 1,784,957 | |||||
Ending balance at Sep. 30, 2022 | $ 87,854 | $ 35 | $ (5,542) | 103,264 | (3,149) | (6,754) |
Common stock, beginning balance (in shares) at Dec. 31, 2022 | 33,105,080 | 33,105,080 | ||||
Beginning balance treasury stock (in shares) at Dec. 31, 2022 | 1,796,862 | 1,796,862 | ||||
Beginning balance at Dec. 31, 2022 | $ 93,402 | $ 35 | $ (5,607) | 104,893 | (2,296) | (3,623) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options (in shares) | 529,802 | |||||
Exercise of stock options | 1,271 | 1,271 | ||||
Share-based compensation (in shares) | 254,883 | |||||
Share-based compensation | 2,925 | $ 1 | 2,924 | |||
ESPP issuance (in shares) | 88,317 | |||||
ESPP issuance | 546 | 546 | ||||
Purchase of treasury stock (in shares) | 34,629 | 40,812 | ||||
Purchase of treasury stock | (436) | $ (436) | ||||
Net income/(loss) | (2,977) | (2,977) | ||||
Foreign currency translation adjustment | $ (119) | (119) | ||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 33,943,453 | 33,943,453 | ||||
Ending balance treasury stock (in shares) at Sep. 30, 2023 | 1,837,674 | 1,837,674 | ||||
Ending balance at Sep. 30, 2023 | $ 94,612 | $ 36 | $ (6,043) | 109,634 | (5,273) | (3,742) |
Common stock, beginning balance (in shares) at Jun. 30, 2023 | 33,908,336 | |||||
Beginning balance treasury stock (in shares) at Jun. 30, 2023 | 1,831,491 | |||||
Beginning balance at Jun. 30, 2023 | 94,873 | $ 36 | $ (5,960) | 108,709 | (5,734) | (2,178) |
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of stock options (in shares) | 11,782 | |||||
Exercise of stock options | 37 | 37 | ||||
Share-based compensation (in shares) | 23,335 | |||||
Share-based compensation | 888 | 888 | ||||
Purchase of treasury stock (in shares) | 6,183 | |||||
Purchase of treasury stock | (83) | $ (83) | ||||
Net income/(loss) | 461 | 461 | ||||
Foreign currency translation adjustment | $ (1,564) | (1,564) | ||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 33,943,453 | 33,943,453 | ||||
Ending balance treasury stock (in shares) at Sep. 30, 2023 | 1,837,674 | 1,837,674 | ||||
Ending balance at Sep. 30, 2023 | $ 94,612 | $ 36 | $ (6,043) | $ 109,634 | $ (5,273) | $ (3,742) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows used in by operating activities | ||
Net (loss)/income | $ (2,977) | $ 8,426 |
Adjustments to reconcile net (loss)/income to net cash used in operating activities | ||
Depreciation and amortization | 4,092 | 3,993 |
Share-based compensation | 3,219 | 3,204 |
Loss on disposal of property and equipment | 281 | 0 |
Gain on sale of discontinued operations, net of tax | 0 | (10,921) |
Deferred taxes | (998) | (3,374) |
Change in assets and liabilities | ||
Accounts receivable | (6,095) | (6,166) |
Contract assets | 1,145 | (2,739) |
Inventory | (6,520) | (6,662) |
Other current assets | 202 | 2,093 |
Other non-current assets | (121) | 599 |
Accounts payable and accrued and other current liabilities | (479) | 5,824 |
Contract liabilities | 111 | 2,425 |
Other non-current liabilities | 0 | 13 |
Net cash used in operating activities | (8,140) | (3,285) |
Cash flows used in investing activities | ||
Acquisition of property and equipment | (1,750) | (2,313) |
Acquisition of intangible property | (95) | 0 |
Proceeds from sale of discontinued operations | 0 | 12,973 |
Acquisition of Luna Innovations Germany GmbH | 0 | (22,085) |
Other | 0 | 29 |
Net cash used in investing activities | (1,845) | (11,396) |
Cash flows provided by financing activities | ||
Payments on finance lease obligations | (37) | (36) |
Proceeds from borrowings under debt obligations | 10,400 | 22,150 |
Payments of debt obligations | (1,750) | (16,275) |
Repurchase of common stock | (436) | (294) |
Proceeds from ESPP | 546 | 521 |
Proceeds from the exercise of stock options | 1,272 | 1,160 |
Net cash provided by financing activities | 9,995 | 7,226 |
Effect of exchange rate changes on cash and cash equivalents | (6) | (1,784) |
Net increase/(decrease) in cash and cash equivalents | 4 | (9,239) |
Cash and cash equivalents—beginning of period | 6,024 | 17,128 |
Cash and cash equivalents—end of period | 6,028 | 7,889 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 1,590 | 209 |
Cash paid for income tax | $ 3,206 | $ 220 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Nature of Operations Luna Innovations Incorporated (“we,” “our” or the “Company”), headquartered in Roanoke, Virginia, was incorporated in the Commonwealth of Virginia in 1990 and reincorporated in the State of Delaware in April 2003. We are a leader in advanced optical technology, providing high performance fiber optic test, measurement and control products for the telecommunications and photonics industries, and distributed fiber optic sensing solutions that measure, or "sense" the structures for industries ranging from aerospace, automotive, oil and gas, security and infrastructure. Our communications test and control products help customers test their fiber optic networks and assemblies with speed and precision in both lab and production environments. Our test and measurement products accelerate the development of high speed fiber optic components like photonic integrated circuits, coherent receivers and short-run fiber networks. Our distributed fiber optic sensing products help designers and manufacturers more efficiently develop new and innovative products by measuring stress, strain, and temperature at a high resolution for new designs or manufacturing processes. Our distributed fiber optic sensing products ensure the safety and structural integrity or operational health of critical assets in the field, by monitoring stress, strain, temperature and vibration in large civil and industrial infrastructure such as bridges, roads, pipelines and borders. We manufacture and sell "terahertz" (THz) products for layer thickness measurements for materials like plastics, rubber, and paint. Our THz products are used in the aerospace and automotive/EV sector. We also provide applied research services, primarily under federally funded development programs, that leverage our sensing and instrumentation technologies to meet the specific needs and applications of our customers. Unaudited Interim Financial Information The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. The unaudited consolidated interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments considered necessary to present fairly our financial position at September 30, 2023, results of operations, comprehensive (loss)/income and changes in stockholders' equity for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The consolidated balance sheet as of December 31, 2022 was derived from our audited consolidated financial statements. The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 16, 2023. Goodwill and Intangible Assets Goodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis, as of October 1 of each year, or whenever events or changes in circumstances indicate that the carrying amount of these assets may be impaired. Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We analyze the reasonableness of the remaining useful life whenever events or circumstances indicate that the carrying amount may not be recoverable to determine whether the carrying value has been impaired. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels: • Level 1—Quoted prices for identical instruments in active markets. • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant value drivers are observable. • Level 3—Valuations derived from valuation techniques in which significant value drivers are unobservable. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued and other liabilities approximate fair value because of the short-term nature of these instruments. The carrying amount of lease liabilities approximate fair value because these financial instruments bear interest at rates that approximate current market rates for similar agreements with similar maturities and credit. We consider the terms of the PNC Bank, National Association debt facility, including its floating per annum interest rate of the daily simple secured overnight financing rate ("SOFR"), plus an SOFR adjustment, plus a margin ranging from 1.75% to 2.75%, to be at market based upon similar instruments that would be available to us. The Company has certain assets and liabilities that have been recorded at fair value on a non-recurring basis following an acquisition. Reportable Segments We have one reportable segment that develops, manufactures and markets distributed fiber optic sensing products and fiber optic communications test and control products. Net Income/(Loss) Per Share Basic per share data is computed by dividing our net income/(loss) by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income/(loss) by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential shares of common stock had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. For the three months ended September 30, 2023 and 2022, the effects of 1,300,847 and 1,304,160 common stock equivalents are included for the diluted per share data, respectively. Stock options, restricted stock units and deferred stock units credited to our directors under our non-employee deferred compensation plan are included in our common stock equivalents. For the nine months ended September 30, 2023 and 2022, all potentially dilutive securities for stock options and restricted stock units were excluded as their impact would be anti-dilutive. The following shares could potentially dilute basic EPS in the future and have been excluded from the computation of diluted weighted average shares outstanding because the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock options 78,000 80,000 165,000 580,000 Restricted stock units 83,000 386,000 1,135,000 947,000 Foreign Currency For our non-U.S. dollar functional currency subsidiaries, assets and liabilities are translated into U.S. dollars using fiscal period end exchange rates. Sales and expenses are translated at average monthly exchange rates. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive loss within equity. Gains and losses resulting from foreign currency transactions are included in earnings. Recently Issued Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which requires companies to measure financial assets at an amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity's current estimate of all expected credit losses. ASU 2016-13 is applicable to our trade receivables and convertible note. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. We adopted ASU 2016-13, effective January 1, 2023. The adoption of ASU 2016-13 did not have a significant impact on our consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations During the fourth quarter of 2022, we recorded revenue and an unbilled receivable of $1.3 million related to our annual Incurred Cost Submission for the year ended 2021 for projects from our Luna Labs business sold on March 7, 2022. As of June 30, 2023, we no longer believed we would be able to collect the majority of the Luna Labs portion of the unbilled receivables and revised our estimated collection from $1.3 million to $0.1 million, resulting in a loss recorded in discontinuing operations of $1.0 million, net of tax, during the three months ended June 30, 2023. |
Intangible assets, net
Intangible assets, net | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets, net | Intangible assets, net Intangible assets, net at September 30, 2023 and December 31, 2022 consisted of the following: Estimated Life September 30, 2023 December 31, 2022 (in thousands) Patent costs 1 - 5 years $ 9,291 $ 9,086 Developed technology 5 - 10 years 16,969 15,924 In-process research and development N/A 1,478 2,631 Customer relationships 5 - 15 years 4,177 4,117 Trade names 3 - 5 years 866 880 Backlog 1 - 3 years 421 331 33,202 32,969 Patent costs (4,857) (4,128) Developed technology (8,673) (6,830) In-process research and development (1,540) (1,763) Customer relationships (948) (574) Trade names (620) (586) Backlog (421) (338) Accumulated amortization (17,059) (14,219) $ 16,143 $ 18,750 Amortization expense for the three and nine months ended September 30, 2023 was $0.9 million and $2.8 million, respectively. Estimated aggregate amortization, based on the net value of intangible assets at September 30, 2023, for each of the next five years and beyond is as follows (in thousands) : Year Ending December 31, 2023 (remaining 3 months) $ 995 2024 3,576 2025 3,261 2026 3,163 2027 2,385 2028 & beyond 2,763 Total $ 16,143 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The change in the carrying value of goodwill during the nine months ended September 30, 2023 was as follows: (in thousands) Balance as of December 31, 2022 $ 26,927 Foreign currency translation (31) Balance as of September 30, 2023 $ 26,896 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory consists of finished goods, work-in-process and raw materials valued at the lower of cost (determined on the first-in, first-out basis) or net realizable value. Components of inventory were as follows: September 30, 2023 December 31, 2022 (in thousands) Finished goods $ 11,236 $ 9,930 Work-in-process 4,405 3,113 Raw materials 27,677 23,539 Total inventory $ 43,318 $ 36,582 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued LiabilitiesAccrued liabilities consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Accrued compensation $ 8,344 $ 8,962 Accrued professional fees 745 720 Accrued income tax 1,028 3,788 Warranty reserve 720 482 Accrued interest 110 64 Accrued liabilities - other 3,758 2,678 Total accrued and other current liabilities $ 14,705 $ 16,694 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Term Loan (net of debt issuance costs of $63 and $74, 7.90% and 6.65% at September 30, 2023 and December 31, 2022, respectively) $ 17,187 $ 18,926 Revolving Loan (7.90% and 6.65% at September 30, 2023 and December 31, 2022) 14,700 4,300 31,887 23,226 Less: Current portion of long-term debt obligations (3,000) (2,500) Long-term debt obligations $ 28,887 $ 20,726 PNC Bank Facility On January 31, 2023, the Company entered into a Loan Modification Agreement (the "Third Amendment") in respect of the Loan Agreement and previous amendments discussed hereafter to slightly modify its net leverage ratio and interest rate applicable margin. On June 21, 2022 (the “Effective Date”), the Company entered into a Loan Modification Agreement (the “Second Amendment”) in respect of its Loan Agreement, dated as of December 1, 2020 (the “Original Loan Agreement” and as amended by that certain First Amendment to Loan Agreement, dated as of March 10, 2022, the Second Amendment, and the Third Amendment the “Loan Agreement”) with PNC Bank, National Association, as lender (the “Lender”) and certain of the Company’s domestic subsidiaries as guarantors, to, among other things, extend the maturity date of the Term Loan and Revolving Line (each as defined below) to June 21, 2027 and increase the total commitments to the Company. The Loan Agreement provides a $15.0 million revolving credit facility (the “Revolving Line”) and a $20 million term loan facility (the “Term Loan”). On the Effective Date, we borrowed the full amount of the Term Loan from the Lender according to a term note (the “Term Note”), a portion of the proceeds of which were used to refinance the remaining principal amount of the $12.5 million in term loans issued under the Original Loan Agreement, and the remainder of which were used to pay down approximately $13.7 million of the $15.0 million in revolving loans outstanding under the Revolving Line (the “Revolving Loan”) according to a revolving line of credit note (the “Revolving Line of Credit Note”). We may repay and reborrow advances under the Revolving Line from time to time according to the Revolving Line of Credit Note. The unused Revolving Line totaled $0.3 million at September 30, 2023. The Term Loan matures on June 21, 2027. The Term Loan amortizes at a rate equal to 10% for the first year, 15% for years two and three, 20% in year four and 15% in year five, in each case payable on a quarterly basis. The remaining balance is due on maturity. Accrued interest is due and payable on the first day of each month and the outstanding principal balance and any accrued but unpaid interest will be due and payable on June 21, 2027. The Term Loan bears interest at a floating per annum rate equal to the sum of (a) the daily simple secured overnight finance rate ("Daily Simple SOFR"), plus (b) an SOFR adjustment of ten basis points (0.10%), plus (c) an applicable margin. The applicable margin ranges from 1.75% to 2.75% per annum, depending on our Net Leverage Ratio (as defined in the Loan Agreement). We may prepay the Term Loan without penalty or premium. The Revolving Line expires on June 21, 2027. Borrowings under the Revolving Line bear interest at a floating per annum rate equal to the sum of (a) the Daily Simple SOFR, plus (b) an SOFR adjustment of ten basis points (0.10%), plus (c) an applicable margin. The applicable margin ranges from 1.75% to 2.75% per annum, depending on our Net Leverage Ratio. Accrued interest is due and payable on the first day of each month and the outstanding principal balance and any accrued but unpaid interest is due and payable on June 21, 2027. The unused portion of the Revolving Line accrues a fee equal to 0.20% per annum multiplied by the quarterly average unused amount. The Loan Agreement includes a number of affirmative and restrictive covenants applicable to us and our subsidiaries, including, among others, financial covenants regarding minimum net leverage and fixed charge coverage, affirmative covenants regarding delivery of financial statements, payment of taxes, and maintenance of government compliance, and restrictive covenants regarding dispositions of property, acquisitions, incurrence of additional indebtedness or liens, investments and transactions with affiliates. We are also restricted from paying dividends or making other distributions or payments on our capital stock, subject to limited exceptions. We were in compliance with these covenants as of September 30, 2023. Upon the occurrence of certain events, including failure to satisfy our payment obligations under the Loan Agreement, failure to adhere to the financial covenants, the breach of certain of our other covenants under the Loan Agreement, cross defaults to other indebtedness or material agreements, judgment defaults and defaults related to failure to maintain governmental approvals, the Lender will have the right, among other remedies, to declare all principal and interest immediately due and payable, and to exercise secured party remedies. Maturities on debt are as follows ( in thousands) : Year Ending December 31, Amount 2023 (remaining 3 months) $ 750 2024 3,000 2025 3,500 2026 4,000 2027 20,700 Total maturities 31,950 Less: deferred issuance costs (63) Total $ 31,887 |
Capital Stock and Share-Based C
Capital Stock and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Capital Stock and Share-Based Compensation | Capital Stock and Share-Based Compensation Stock Options For the three and nine months ended September 30, 2023, we recognized $24.4 thousand and $118.3 thousand, respectively, in share-based compensation expense related to stock options, which is included in our selling, general and administrative expense in the accompanying consolidated statement of operations. Share-based compensation expense related to stock options for the three and nine months ended September 30, 2022 totaled $0.2 million and $0.6 million, respectively. We expect to recognize $0.1 million in share-based compensation expense over the weighted-average remaining service period of 1.1 years for stock options outstanding as of September 30, 2023. Restricted Stock Units During the three and nine months ended September 30, 2023, we granted 85,740 and 388,869 time-based restricted stock units ("RSUs"), respectively. During the three and nine months ended September 30, 2022, we granted 190,000 and 823,842 time-based RSUs, respectively. The general terms of the RSUs are similar to awards previously granted by us. The weighted average fair value of the time-based RSUs granted during the three and nine months ended September 30, 2023 was $8.87 and $8.37 per share, respectively. The fair value of each RSU was determined based on the market price of our stock on the date of grant. In addition, pursuant to our Deferred Compensation Plan, non-employee directors can elect to defer the receipt of some or all of the equity compensation that they receive for board and committee service. During the three and nine months ended September 30, 2023, we granted 7,348 and 65,284.76 RSUs, respectively, pursuant to the Deferred Compensation Plan. During the three and nine months ended September 30, 2022, we granted 14,299 and 112,560 RSUs, respectively, pursuant to the Deferred Compensation Plan. The general terms of these RSUs are similar to awards previously granted by us. The weighted average fair value of these RSUs granted during the three and nine months ended September 30, 2023, was $9.05 and $8.65 per share, respectively. The fair value of each RSU was determined based on the market price of our stock on the date of grant. For the three and nine months ended September 30, 2023, we recognized $0.9 million and $2.8 million, respectively, in share-based compensation expense related to RSUs, which is included in our selling, general and administrative expense in the accompanying consolidated statement of operations. Share-based compensation related to RSUs for the three and nine months ended September 30, 2022 totaled $0.6 million and $1.8 million, respectively. We expect to recognize $5.8 million in share-based compensation expense over the weighted-average remaining service period of 1.2 years for RSUs outstanding as of September 30, 2023. Employee Stock Purchase Plan ("ESPP") For each of the three and nine months ended September 30, 2023, we recognized $0.1 million and $0.3 million, respectively, in share-based compensation expense related to the ESPP, which is included in our selling, general and administrative expense in the accompanying consolidated statement of operations. Share-based compensation related to the ESPP for the three and nine months ended September 30, 2022 totaled $0.1 million and $0.2 million, respectively. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenue We disaggregate our revenue from contracts with customers by geographic locations, customer type, contract type, timing of recognition, and major categories, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. We disaggregate revenue on the basis of where the physical goods are shipped. We also classify revenue by the customer type of entity for which it does business, which is an indicator of the diversity of our client base. We attribute revenue generated from being a subcontractor to a commercial company as government revenue when the ultimate client is a government agency or department. Disaggregation by contract mix provides insight in terms of the degree of performance risk that we have assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as we are required to deliver a scope of work or level of effort for a negotiated fixed price. Cost-based contracts are considered to provide the lowest amount of performance risk since we are generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements. By classifying revenue by major product and service, we attribute revenue from a client to the major product or service that we believe to be the client's primary market. The details are listed in the table below for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) (unaudited) (unaudited) Total Revenue by Geographic Location United States $ 10,238 $ 12,597 36,280 $ 33,361 Asia 11,388 7,248 20,769 16,265 Europe 6,266 8,300 19,566 20,765 Canada, Central and South America 1,859 661 5,681 6,846 All Others 952 347 2,616 558 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Major Customer Type Sales to the U.S. government $ 1,982 $ 2,604 $ 5,207 $ 6,394 U.S. direct commercial sales and other 8,257 9,993 31,074 26,967 Foreign commercial sales & other 20,464 16,556 48,631 44,434 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Contract Type Fixed-price contracts $ 30,234 $ 28,202 $ 82,757 $ 75,556 Cost-type contracts 469 951 2,155 2,239 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 27,921 $ 25,114 75,761 $ 66,608 Goods/services transferred over time 2,782 4,039 9,151 11,187 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Major Products/Services Technology development $ 1,253 $ 2,062 4,381 $ 5,198 Test, measurement and sensing systems 29,217 26,809 79,783 70,927 Other 233 282 748 1,670 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Contract Balances Our contract assets consist of unbilled amounts for research contracts as well as custom product contracts. Contract liabilities include excess billings, and customer deposits. During the three and nine months ended September 30, 2023, we recognized $0.3 million and $2.9 million of revenue, respectively, that was included in contract liabilities as of December 31, 2022. The following table shows the components of our contract balances as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (in thousands) Contract assets $ 7,324 $ 7,691 Contract liabilities 4,619 4,089 Net contract assets $ 2,705 $ 3,602 Performance Obligations Unfulfilled performance obligations represent amounts expected to be earned on executed contracts. Indefinite delivery and quantity contracts and unexercised options are not reported in total unfulfilled performance obligations. Unfulfilled performance obligations include funded obligations, which is the amount for which money has been directly authorized by the U.S. government and for which a purchase order has been received by a commercial customer, and unfunded obligations represent firm orders for which funding has not yet been appropriated. The approximate value of our unfulfilled performance obligations was $49.0 million at September 30, 2023. We expect to satisfy 41% of the performance obligations in 2023, 55% in 2024 and the remainder by 2028. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesOur provision for income taxes is based upon the estimated annual effective tax rate for the year applied to the current period income plus the tax effect of any significant or unusual items, discrete events or changes in tax law. Fluctuations in the distribution of pre-tax income among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. We and our subsidiaries file U.S. federal income tax returns and income tax returns in various state, local, and foreign jurisdictions. For the nine months ended September 30, 2023, our effective income tax rate was 27.2% compared to 14.5% for the nine months ended September 30, 2022. Historically, our tax rate can vary significantly from the federal statutory rate of 21% due to losses generated in jurisdictions where the benefit is not expected to be recognized partially offset by favorable impacts from stock award vesting and exercises, foreign-derived intangible income deduction and research and development tax credits. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesWe are from time to time involved in certain legal proceedings in the ordinary course of conducting our business. While the ultimate liability pursuant to these actions cannot currently be determined, we believe it is not reasonably possible that these legal proceedings will have a material adverse effect on our financial position or results of operations.We executed multiple non-cancelable purchase orders totaling $3.1 million in the second quarter of 2022, $4.6 million in the fourth quarter of 2022, $0.6 million in the first quarter of 2023, and $2.7 million in the third quarter of 2023 for multiple shipments of tunable lasers to be delivered over a 11-21 month period. At September 30, 2023, approximately $7.9 million of non-cancelable purchase order commitments remained and are expected to be delivered by March 3, 2025. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations Luna Innovations Incorporated (“we,” “our” or the “Company”), headquartered in Roanoke, Virginia, was incorporated in the Commonwealth of Virginia in 1990 and reincorporated in the State of Delaware in April 2003. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. The unaudited consolidated interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments considered necessary to present fairly our financial position at September 30, 2023, results of operations, comprehensive (loss)/income and changes in stockholders' equity for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The consolidated balance sheet as of December 31, 2022 was derived from our audited consolidated financial statements. The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 16, 2023. |
Goodwill and Intangible Assets | Goodwill and Intangible AssetsGoodwill and intangible assets with indefinite lives are not amortized but are tested for impairment on an annual basis, as of October 1 of each year, or whenever events or changes in circumstances indicate that the carrying amount of these assets may be impaired. Purchased intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We analyze the reasonableness of the remaining useful life whenever events or circumstances indicate that the carrying amount may not be recoverable to determine whether the carrying value has been impaired. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels: • Level 1—Quoted prices for identical instruments in active markets. • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant value drivers are observable. • Level 3—Valuations derived from valuation techniques in which significant value drivers are unobservable. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued and other liabilities approximate fair value because of the short-term nature of these instruments. The carrying amount of lease liabilities approximate fair value because these financial instruments bear interest at rates that approximate current market rates for similar agreements with similar maturities and credit. We consider the terms of the PNC Bank, National Association debt facility, including its floating per annum interest rate of the daily simple secured overnight financing rate ("SOFR"), plus an SOFR adjustment, plus a margin ranging from 1.75% to 2.75%, to be at market based upon similar instruments that would be available to us. The Company has certain assets and liabilities that have been recorded at fair value on a non-recurring basis following an acquisition. |
Reportable Segments | Reportable Segments We have one reportable segment that develops, manufactures and markets distributed fiber optic sensing products and fiber optic communications test and control products. |
Net Income/(Loss) Per Share | Net Income/(Loss) Per Share Basic per share data is computed by dividing our net income/(loss) by the weighted average number of shares outstanding during the period. Diluted per share data is computed by dividing net income/(loss) by the weighted average shares outstanding during the period increased to include, if dilutive, the number of additional common share equivalents that would have been outstanding if potential shares of common stock had been issued using the treasury stock method. Diluted per share data would also include the potential common share equivalents relating to convertible securities by application of the if-converted method. For the three months ended September 30, 2023 and 2022, the effects of 1,300,847 and 1,304,160 common stock equivalents are included for the diluted per share data, respectively. Stock options, restricted stock units and deferred stock units credited to our directors under our non-employee deferred compensation plan are included in our common stock equivalents. For the nine months ended September 30, 2023 and 2022, all potentially dilutive securities for stock options and restricted stock units were excluded as their impact would be anti-dilutive. |
Foreign Currency | Foreign CurrencyFor our non-U.S. dollar functional currency subsidiaries, assets and liabilities are translated into U.S. dollars using fiscal period end exchange rates. Sales and expenses are translated at average monthly exchange rates. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive loss within equity. Gains and losses resulting from foreign currency transactions are included in earnings. |
Recently Issued Pronouncements | Recently Issued Pronouncements In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, which requires companies to measure financial assets at an amortized cost basis to be presented at the net amount expected to be collected. The new accounting rules eliminate the probable initial recognition threshold and, instead, reflect an entity's current estimate of all expected credit losses. ASU 2016-13 is applicable to our trade receivables and convertible note. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. We adopted ASU 2016-13, effective January 1, 2023. The adoption of ASU 2016-13 did not have a significant impact on our consolidated financial statements. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following shares could potentially dilute basic EPS in the future and have been excluded from the computation of diluted weighted average shares outstanding because the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock options 78,000 80,000 165,000 580,000 Restricted stock units 83,000 386,000 1,135,000 947,000 |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets, net at September 30, 2023 and December 31, 2022 consisted of the following: Estimated Life September 30, 2023 December 31, 2022 (in thousands) Patent costs 1 - 5 years $ 9,291 $ 9,086 Developed technology 5 - 10 years 16,969 15,924 In-process research and development N/A 1,478 2,631 Customer relationships 5 - 15 years 4,177 4,117 Trade names 3 - 5 years 866 880 Backlog 1 - 3 years 421 331 33,202 32,969 Patent costs (4,857) (4,128) Developed technology (8,673) (6,830) In-process research and development (1,540) (1,763) Customer relationships (948) (574) Trade names (620) (586) Backlog (421) (338) Accumulated amortization (17,059) (14,219) $ 16,143 $ 18,750 |
Schedule of Estimated Aggregate Amortization Based on Net Value of Intangible Assets | Estimated aggregate amortization, based on the net value of intangible assets at September 30, 2023, for each of the next five years and beyond is as follows (in thousands) : Year Ending December 31, 2023 (remaining 3 months) $ 995 2024 3,576 2025 3,261 2026 3,163 2027 2,385 2028 & beyond 2,763 Total $ 16,143 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The change in the carrying value of goodwill during the nine months ended September 30, 2023 was as follows: (in thousands) Balance as of December 31, 2022 $ 26,927 Foreign currency translation (31) Balance as of September 30, 2023 $ 26,896 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Components of inventory were as follows: September 30, 2023 December 31, 2022 (in thousands) Finished goods $ 11,236 $ 9,930 Work-in-process 4,405 3,113 Raw materials 27,677 23,539 Total inventory $ 43,318 $ 36,582 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Accrued compensation $ 8,344 $ 8,962 Accrued professional fees 745 720 Accrued income tax 1,028 3,788 Warranty reserve 720 482 Accrued interest 110 64 Accrued liabilities - other 3,758 2,678 Total accrued and other current liabilities $ 14,705 $ 16,694 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Term Loan (net of debt issuance costs of $63 and $74, 7.90% and 6.65% at September 30, 2023 and December 31, 2022, respectively) $ 17,187 $ 18,926 Revolving Loan (7.90% and 6.65% at September 30, 2023 and December 31, 2022) 14,700 4,300 31,887 23,226 Less: Current portion of long-term debt obligations (3,000) (2,500) Long-term debt obligations $ 28,887 $ 20,726 |
Schedule of Maturities of Long-term Debt | Maturities on debt are as follows ( in thousands) : Year Ending December 31, Amount 2023 (remaining 3 months) $ 750 2024 3,000 2025 3,500 2026 4,000 2027 20,700 Total maturities 31,950 Less: deferred issuance costs (63) Total $ 31,887 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The details are listed in the table below for the three and nine months ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) (unaudited) (unaudited) Total Revenue by Geographic Location United States $ 10,238 $ 12,597 36,280 $ 33,361 Asia 11,388 7,248 20,769 16,265 Europe 6,266 8,300 19,566 20,765 Canada, Central and South America 1,859 661 5,681 6,846 All Others 952 347 2,616 558 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Major Customer Type Sales to the U.S. government $ 1,982 $ 2,604 $ 5,207 $ 6,394 U.S. direct commercial sales and other 8,257 9,993 31,074 26,967 Foreign commercial sales & other 20,464 16,556 48,631 44,434 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Contract Type Fixed-price contracts $ 30,234 $ 28,202 $ 82,757 $ 75,556 Cost-type contracts 469 951 2,155 2,239 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Timing of Recognition Goods transferred at a point in time $ 27,921 $ 25,114 75,761 $ 66,608 Goods/services transferred over time 2,782 4,039 9,151 11,187 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 Total Revenue by Major Products/Services Technology development $ 1,253 $ 2,062 4,381 $ 5,198 Test, measurement and sensing systems 29,217 26,809 79,783 70,927 Other 233 282 748 1,670 Total $ 30,703 $ 29,153 $ 84,912 $ 77,795 |
Schedule of components of contract balances | The following table shows the components of our contract balances as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (in thousands) Contract assets $ 7,324 $ 7,691 Contract liabilities 4,619 4,089 Net contract assets $ 2,705 $ 3,602 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 shares | Sep. 30, 2022 shares | Sep. 30, 2023 segment | |
Debt Instrument [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Common stock equivalents included in diluted per share data (in shares) | shares | 1,300,847 | 1,304,160 | |
SOFR | PNC Bank Facility | Minimum | Term Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate (in percent) | 1.75% | ||
SOFR | PNC Bank Facility | Maximum | Term Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate (in percent) | 2.75% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 78,000 | 80,000 | 165,000 | 580,000 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares (in shares) | 83,000 | 386,000 | 1,135,000 | 947,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Loss from discontinued operations | $ 0 | $ (28) | $ 1,038 | $ (622) | ||
Discontinued Operations, Held-for-sale or Disposed of by Sale | Luna Labs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Revenue | $ 1,300 | |||||
Receivables | $ 100 | $ 1,300 | ||||
Loss from discontinued operations | $ 1,000 |
Intangible assets, net - Summar
Intangible assets, net - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 33,202 | $ 32,969 |
Accumulated amortization | (17,059) | (14,219) |
Total | 16,143 | 18,750 |
Patent costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 9,291 | 9,086 |
Accumulated amortization | $ (4,857) | (4,128) |
Patent costs | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 1 year | |
Patent costs | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 5 years | |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 16,969 | 15,924 |
Accumulated amortization | $ (8,673) | (6,830) |
Developed technology | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 5 years | |
Developed technology | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 10 years | |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 1,478 | 2,631 |
Accumulated amortization | (1,540) | (1,763) |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 4,177 | 4,117 |
Accumulated amortization | $ (948) | (574) |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 5 years | |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 15 years | |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 866 | 880 |
Accumulated amortization | $ (620) | (586) |
Trade names | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 3 years | |
Trade names | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 5 years | |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 421 | 331 |
Accumulated amortization | $ (421) | $ (338) |
Backlog | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 1 year | |
Backlog | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Life | 3 years |
Intangible assets, net - Additi
Intangible assets, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 929 | $ 987 | $ 2,839 | $ 2,794 |
Intangible assets, net - Estima
Intangible assets, net - Estimated Aggregate Amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 (remaining 3 months) | $ 995 | |
2024 | 3,576 | |
2025 | 3,261 | |
2026 | 3,163 | |
2027 | 2,385 | |
2028 & beyond | 2,763 | |
Total | $ 16,143 | $ 18,750 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 26,927 |
Foreign currency translation | (31) |
Ending balance | $ 26,896 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 11,236 | $ 9,930 |
Work-in-process | 4,405 | 3,113 |
Raw materials | 27,677 | 23,539 |
Total inventory | $ 43,318 | $ 36,582 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 8,344 | $ 8,962 |
Accrued professional fees | 745 | 720 |
Accrued income tax | 1,028 | 3,788 |
Warranty reserve | 720 | 482 |
Accrued interest | 110 | 64 |
Accrued liabilities - other | 3,758 | 2,678 |
Total accrued and other current liabilities | $ 14,705 | $ 16,694 |
Debt - Long Term Debt Instrumen
Debt - Long Term Debt Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total | $ 31,887 | $ 23,226 |
Less: Current portion of long-term debt obligations | (3,000) | (2,500) |
Long-term debt obligations | 28,887 | 20,726 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Net of debt issuance costs | $ 63 | $ 74 |
Debt instrument, stated percentage (in percent) | 7.90% | 6.65% |
Total | $ 17,187 | $ 18,926 |
Revolving Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage (in percent) | 7.90% | 6.65% |
Total | $ 14,700 | $ 4,300 |
Debt - Additional Information (
Debt - Additional Information (Details) - PNC Bank Facility - USD ($) | 9 Months Ended | |
Jan. 31, 2023 | Sep. 30, 2023 | |
Term Loan | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 1.75% | |
Term Loan | SOFR | Maximum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 2.75% | |
Loan Modification Agreement | Revolving Loan | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 15,000,000 | |
Line of credit facility, remaining borrowing capacity | $ 300,000 | |
Repayments of lines of credit | $ 13,700,000 | |
Commitment fee percentage (in percent) | 0.20% | |
Loan Modification Agreement | Revolving Loan | SOFR | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 0.10% | |
Loan Modification Agreement | Revolving Loan | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 1.75% | |
Loan Modification Agreement | Revolving Loan | SOFR | Maximum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 2.75% | |
Loan Modification Agreement | Term Loan | ||
Debt Instrument [Line Items] | ||
Debt, face amount | $ 20,000,000 | |
Line of credit facility, remaining borrowing capacity | $ 12,500,000 | |
Loan Modification Agreement | Term Loan | SOFR | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 0.10% | |
Loan Modification Agreement | Term Loan | SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 1.75% | |
Loan Modification Agreement | Term Loan | SOFR | Maximum | ||
Debt Instrument [Line Items] | ||
Variable basis rate (in percent) | 2.75% | |
Loan Modification Agreement | Term Loan | Period 1 | ||
Debt Instrument [Line Items] | ||
Debt instrument, amortization period, percentage (in percent) | 10% | |
Loan Modification Agreement | Term Loan | Period 2 | ||
Debt Instrument [Line Items] | ||
Debt instrument, amortization period, percentage (in percent) | 15% | |
Loan Modification Agreement | Term Loan | Period 3 | ||
Debt Instrument [Line Items] | ||
Debt instrument, amortization period, percentage (in percent) | 15% | |
Loan Modification Agreement | Term Loan | Period 4 | ||
Debt Instrument [Line Items] | ||
Debt instrument, amortization period, percentage (in percent) | 20% | |
Loan Modification Agreement | Term Loan | Period 5 | ||
Debt Instrument [Line Items] | ||
Debt instrument, amortization period, percentage (in percent) | 15% |
Debt - Maturities of Long-term
Debt - Maturities of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
2023 (remaining 3 months) | $ 750 | |
2024 | 3,000 | |
2025 | 3,500 | |
2026 | 4,000 | |
2027 | 20,700 | |
Total maturities | 31,950 | |
Less: deferred issuance costs | (63) | |
Total | $ 31,887 | $ 23,226 |
Capital Stock and Share-Based_2
Capital Stock and Share-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 24,400 | $ 200,000 | $ 118,300 | $ 600,000 |
Stock-based compensation expense not yet recognized | 100,000 | $ 100,000 | ||
Weighted average remaining service period | 1 year 1 month 6 days | |||
Restricted stock units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 900,000 | $ 600,000 | $ 2,800,000 | $ 1,800,000 |
Stock-based compensation expense not yet recognized | $ 5,800,000 | $ 5,800,000 | ||
Weighted average remaining service period | 1 year 2 months 12 days | |||
RSUs granted (in shares) | 85,740 | 190,000 | 388,869 | 823,842 |
RSUs granted (in dollars per share) | $ 8.87 | $ 8.37 | ||
Restricted stock units (RSUs) | Non-Employee Director Deferred Compensation Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs granted (in shares) | 7,348 | 14,299 | 65,284.76 | 112,560 |
RSUs granted (in dollars per share) | $ 9.05 | $ 8.65 | ||
ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 100,000 | $ 100,000 | $ 300,000 | $ 200,000 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 30,703 | $ 29,153 | $ 84,912 | $ 77,795 |
Technology development | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,253 | 2,062 | 4,381 | 5,198 |
Test, measurement and sensing systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 29,217 | 26,809 | 79,783 | 70,927 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 233 | 282 | 748 | 1,670 |
Goods transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 27,921 | 25,114 | 75,761 | 66,608 |
Goods/services transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,782 | 4,039 | 9,151 | 11,187 |
Fixed-price contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 30,234 | 28,202 | 82,757 | 75,556 |
Cost-type contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 469 | 951 | 2,155 | 2,239 |
Sales to the U.S. government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,982 | 2,604 | 5,207 | 6,394 |
U.S. direct commercial sales and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 8,257 | 9,993 | 31,074 | 26,967 |
Foreign commercial sales & other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 20,464 | 16,556 | 48,631 | 44,434 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,238 | 12,597 | 36,280 | 33,361 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 11,388 | 7,248 | 20,769 | 16,265 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 6,266 | 8,300 | 19,566 | 20,765 |
Canada, Central and South America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,859 | 661 | 5,681 | 6,846 |
All Others | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 952 | $ 347 | $ 2,616 | $ 558 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||
Revenue recognized | $ 300 | $ 2,900 | |
Contract assets | 7,324 | 7,324 | $ 7,691 |
Contract liabilities | 4,619 | 4,619 | 4,089 |
Net contract assets | $ 2,705 | $ 2,705 | $ 3,602 |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligation Amount (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 49 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage (in percent) | 41% |
Remaining performance obligation, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage (in percent) | 55% |
Remaining performance obligation, period | 1 year |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (in percent) | 27.20% | 14.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Tunable lasers - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Loss Contingencies [Line Items] | ||||
Non-cancelable purchase order commitment | $ 2,700 | $ 600 | $ 4,600 | $ 3,100 |
Non-cancelable purchase order commitment remained | $ 7,900 | |||
Minimum | ||||
Loss Contingencies [Line Items] | ||||
Non-cancelable purchase order delivery period (in months) | 11 months | |||
Maximum | ||||
Loss Contingencies [Line Items] | ||||
Non-cancelable purchase order delivery period (in months) | 21 months |