LUNA

Luna Innovations Incorporated (LUNA)

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Luna Innovations Incorporated (LUNA)

Q2 2010 Earnings Call Transcript

August 10, 2010 5:00 pm ET

Executives

Dale Messick – Interim President and COO

Mark Froggatt – Chief Technology Officer

Analysts

John Moses [ph]

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the 2010 second quarter Luna Innovations Incorporated earnings conference call. My name is Modesta and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Dale Messick, Interim President and Chief Operating Officer. Please proceed.

Dale Messick

Thank you very much, Modesta. Good afternoon, everyone and thank you for taking the time today to join us as we review our progress and results for the second quarter of 2010.

Before I go further, let me remind each of you that statements made in this conference call and our public filings, releases, and websites, which are not historical facts, maybe forward-looking statements that involve risks and uncertainties, and are subject to changes at anytime including, but not limited to, statements about future financial or operating performance or management transition and future research contract awards.

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 discussed in our earnings release and our latest Form 10-Q filed 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.

Earlier today, we announced that the company has begun an executive search process for a new Chief Executive Officer at Luna and engaged an executive recruiting firm to assist us in that process. Furthering the transition plans – plan that we announced back in May of this year, Kent Murphy, Luna's Founder and previous Chief Executive Officer, has resigned from the CEO position. As many of you know, Kent founded the company 20 years ago and has overseen its growth and successes to this point in time.

Kent will remain a member of our Board of Directors with appointment to the position of Vice Chairman of the Board and is expected to provide ongoing consulting services with a focus on the continued evolution of our business strategy and scientific vision in the future. The company and its employees thank Kent for his leadership over these many years and look forward to the continued benefit of his guidance in our future successes.

In addition, Jonathan Cool will return to the role of Board member. Jonathan came into Luna in May as the Interim President and Chief Operating Officer as the initial step in the announced CEO transition plan. During that time, Jonathan has focused his attentions on evaluating our commercialization strategy, our practices and procedures, our structure and capabilities, and the leadership team overall in preparation for initiating the formal CEO search.

Having executed on those matters and communicating with the Board members, the Board concluded that we have reached the appropriate time to initiate the second stage of the transition plan with the commencement of the search for a new permanent CEO.

Jonathan will also remain a highly valued member of our Board of Directors and will continue to provide the company with viable leadership as Chairman of our Strategy Committee with the first-hand knowledge of our business that he has gained over the past few months. We thank Jonathan for the insights into our business and the improvements that he was able to implement in a short period of time, as well as the continued benefit of his knowledge and ideas in executing our business plans.

During the period of the CEO search, I will assume the role of Interim President and Chief Operating Officer and Scott Graeff will assume the additional role of interim Chief Financial Officer. For those of you who may be new to Luna, Scott has a long history of leadership at the company, including the position of Chief Financial Officer during the period leading up to and through the completion of the company's IPO. Scott and I continue to be surrounded the same leadership team at Luna, dedicated to providing outstanding products and services to our customers with industry-leading technologies and capabilities.

With that, let me now turn our focus to the business results for the second quarter.

Overall, our results of operations continued their positive trend with increased revenues compared to the second quarter of last year, lower operating expenses, and improvements in the bottom line, in adjusted EBITDA, and in our cash flows. Specifically, for the second quarter of 2009 [ph], we recorded revenues of $9 million, an increase of 4% compared to $8.7 million for the second quarter of 2009.

Revenues in our product and license segment increased 31% to $2.9 million for the second quarter of 2010 compared to $2.2 million in the second quarter of 2009, primarily due to increased sales in our OVA product line, with the introduction of the OVA 5000 back in the first quarter of the year.

Read the rest of this transcript for free on seekingalpha.com