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Luna Innovations Inc. (LUNA)
Q4 2009 Earnings Call
March 4, 2010 5:00 pm ET
Dale Messick – CFO
Kent Murphy – Chairman and CEO
Harry Pelling [ph] – C&H Trucking [ph]
Previous Statements by LUNA
» Luna Innovations Incorporated Q3 2009 Earnings Call Transcript
» Luna Innovations Incorporated Q1 2009 Earnings Call Transcript
» Luna Innovations Q4 2008 Earnings Call Transcript
I would now like to turn the conference over to your host for today, Mr. Dale Messick, Chief Financial Officer.
Thank you, Regina. Before we begin, let me remind each of you that statements made on today's call contain forward-looking statements that involve risks and uncertainties and are subject to change at anytime. We caution investors that any forward-looking statements made by us are management's beliefs based on currently available information and should not be taken as a guarantee of future results or performance, which may differ materially as a result of a variety of factors including those factors described in our earnings release and our filings on Form 10-Q and 10-K with the Securities and Exchange Commission.
We disclaim any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments. There is more complete information regarding forward-looking statements, risks and uncertainties in the company's filings with the SEC available on our website.
And now, I would like to turn the call over to Kent Murphy, Chief Executive Officer of Luna Innovations.
Thank you very much, Dale. Good afternoon, everyone and thank you for joining us today. We had a good fourth quarter and we are off to a great start in 2010. I'm happy to be able to share some of those things with you today.
Revenues grew by 15% compared to the fourth quarter of 2008 from $7.4 million to $8.5 million, driven by a strong recovery in our product and licensing business, which realized a growth of 128% over last year's fourth quarter.
Adjusted EBITDA, which excludes the litigation and bankruptcy related costs, improved from breakeven for the last quarter of 2008 to $1 million for the fourth quarter of 2009. And for the year, our adjusted EBITDA, excluded those items, improved from $0.3 million to $2.3 million even with decreased revenue during the down economy.
In the fourth quarter, the product and licensing business began to show recovery from the declines that began late in 2008. We finished the year with a strong book of new orders that not only resulted in more than doubling of product revenue for the quarter, but it also provided a healthy backlog of orders to carry into the start of 2010. We are optimistic that growth in this segment of our business could return the levels we were seeing prior to the downturn in the overall economy.
With returning demand for our existing products and planned launches of new products in the near term, it will allow us to penetrate new market opportunities. I believe we are poised for successful year at Luna.
We hope to build on the demand with our participation of the Optical Fiber Communications Conference and Exposition, which is the largest annual gathering of fiber optic professionals in the United States. At the conference, we will have a team demonstrating and promoting our product capabilities including a new portable Optical Backscatter Reflectometer with applications in telecommunications and in sensing, and our recently released OVA 5000 for the telecommunications industry.
Related to our successes in optical sensing and instrumentation is also the work that we continue to do for Intuitive Surgical and others. This past December, we completed the development requires that were contained in our initial agreement with Intuitive. The development teams have achieved remarkable results. And as a result of this success, as we announced back in January, Intuitive and Luna have amended the agreement to expand our development work for them.
We've also kicked off our new development projects with Hansen Medical as well. We have a technology development plan in place with them and have started the work. I'm very happy to report that the Hansen and Luna teams are in fact working very well together and we look forward to a long and mutually rewarding relationship there as well.
One of the benefits that we enjoy from relationships with business partners such as Intuitive and Hansen, as well as working on new product development efforts with entities like the United States Navy, is the ability to develop solutions for their needs and to also advance the overall optical sensing platform. We can then use the enhanced platform in other non-competing markets.
In the past, I have spoken about this model with examples like the ability to use the fiber sensing capabilities in areas such as power generation, whether gas or wind turbines, non-robotic medical applications, transportation, and defense applications. We recently completed our first shipment of our high-speed strain sensing system based on these advances. As we continue to enhance and promote the capabilities of the platform, the cost of higher performance continues to come down, new applications and markets continue to be identified and pursued.
As performance goes up and costs come down, opportunities that we have discussed in the past, as well as opportunities in new markets we are developing a very strong pipeline of future product revenue opportunities. We are beginning to realize the benefits of this optical platform that we visualized back at our IPO and this platform will be a major focus of our business going forward.