Luna Innovations Incorporated
Q4 2020 Earnings Call Transcript

Published: 11 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Luna Innovations Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your first speaker for today, Ms. Allison Woody, Director of Administration. Thank you. Please go ahead, ma'am.

[Allison Woody:]

Thank you. Good afternoon and thank you for joining us today. This afternoon, we issued our fourth quarter and full year 2020 earnings press release. In addition, we posted to the Investor Relations section of our website, a presentation with supplemental information for the quarter.

[Scott Graeff:]

Good afternoon, everyone, and thanks for taking the time to join our call. I have to admit that as I began to prepare for this call, I became very introspective about the year we just experienced, unprecedented for sure, 2020 was an extraordinary year for Luna in so many ways that I could not have envisioned. As we will discuss today, Luna had an incredible and record-breaking year. Our results and accomplishments would be impressive in the context of a normal year, but they are even more remarkable given that we executed in the middle of a devastating pandemic. I looked back at the call that we had with you a year ago. We had just come off a record-breaking 2019, and we gave you our guidance for 2020, not having any idea what was about to hit the global economy and global consciousness.

[Gene Nestro:]

Thank you, Scott. I will get to the fourth quarter financials in a moment. But first, I want to provide some broad thoughts on our progress last year. I am really proud of the progress that we made in driving superior operating and financial results while also putting into place the people, processes and platforms that will allow us to scale significantly without further investment in back office infrastructure. We had a terrific Q4 and 2020 fiscal year despite the environment in which we were working. So let me be clear about our financial position. Our sales, profitability and cash position are all healthy. Last quarter, I spoke about the implementation of our new ERP. As Scott mentioned, we started the year by going live on January 1, which was a great way to celebrate New Year's. This new system is already paying dividends. Before I proceed, I want to note that our reported numbers include the results of our two recent acquisitions we completed towards the end of the year, New Ridge technologies and OptaSense and their related transaction expenses. With that as context, I'll now shift to cover our fourth quarter results. As Scott noted, our revenues for Q4 2020 were $25.9 million compared to revenues of $19.5 million for Q4 2019, representing a 33% year-over-year increase. The increase in revenues year-over-year was composed of a 38% increase in our Lightwave segment and a 21% increase in our Luna Lab segment. Within the Lightwave segment, year-over-year growth was driven by strong performance from both our sensing business and our communications test business, the latter of which included shipments related to the large Lockheed Martin order that Scott referenced. Within Luna Labs, growth was driven by later stage commercial products. Our gross profit increased to $13.4 million for the quarter compared to $10.4 million for the same quarter last year, representing a gross margin of 51.5% in Q4 2020 compared to 53.3% in Q4 of 2019. Remember that Q4 2019 had a very favorable sales mix that resulted in the higher gross margin. Our Q4 2020 gross margin is in line with our recent trends of 51% to 52%. Operating expenses were $12.8 million, which includes $2.2 million of transaction-related expenses in Q4 2020 compared to $8.7 million in Q4 2019. Our Q4 '20 OpEx run rate continues to decline as a percentage of revenue. Due to the acquisition-related expenses of $2.2 million, our operating profit decreased to $500,000 in Q4 2020 compared to $1.7 million in Q4 last year. Without OptaSense and the related transaction expenses, operating income would have been $3.7 million, up $2 million versus 2019. Net loss from continuing operations for Q4 2020 was $64,000 or zero on a per share basis. Compared to net income from continuing operations of $2.1 million or $0.07 per share for Q4 2019. Excluding the OptaSense acquisition and the related transaction expenses, net income would have been $3.0 million or $0.09 per share. Income tax expense for Q4 2020 was primarily impacted by a valuation allowance related to OptaSense, the tax provisions or return true-ups and other year-end items. We estimate our 2021 effective tax rate to be in the range of 21% to 25%. And finally, a key metric reflecting our underlying operations as adjusted EBITDA. As Scott mentioned, adjusted EBITDA increased to $4.3 million for the fourth quarter of 2020 versus $3.2 million for Q4 2019. This solid performance was driven primarily by top line growth from both our legacy businesses and those businesses we acquired, combined with our ongoing expense management. Let me now move to the balance sheet. We ended the quarter and year with $15.4 million of cash and cash equivalents compared to $25 million at the end of 2019. The decrease was due to the use of approximately $20 million of our cash from our balance sheet towards the purchase of OptaSense in December. Before I cover working capital and debt, I want to take -- a comment about one other balance sheet item that is inventory. You will note that inventory increased significantly year-over-year from $10.3 million in 2019 to $23.6 million in 2020. The increase is largely due to the inventory at OptaSense, which they have in anticipation of future sales. Our working capital was $45.4 million at December 31 compared to $41.1 million on December 31, 2019. Our working capital increased primarily due to the OptaSense acquisition. Remember that at the time of the acquisition, in addition to the new banking relationship with PNC, we also announced a new debt facility comprised of two separate financing vehicles, a term facility and a revolver facility. On top of the $20 million in cash from our balance sheet that I just mentioned, we funded the acquisition with $20 million in debt. The debt piece comprises $12.5 million of the new term facility and the remaining roughly $8 million was drawn from our new revolving credit line. We have access to an additional $7.5 million in the revolving credit facility should we need it. Without repeating the 2021 outlook Scott provided, I'll just say that we, again, did a comprehensive bottoms-up analysis, which provided good insight into our forecast for the year. In addition, through the intense due diligence process for OptaSense, we were able to get comfortable with that company's potential in 2021 and therefore, fold that information into our 2021 planning and guidance. Given the timing of the close of the deal so close to the end of the year and the holidays, we really hadn't begun much integration before we closed out the year. But as we've done with every other acquisition, we plan to push hard on integration and would expect that by later this year, it will be very difficult to distinguish between organic Lightwave and OptaSense. We understand that this pandemic is not over, and we continue to monitor and evaluate the effects on a daily basis to ensure we understand any potential impact on our business. So overall, I'm very proud of what we were able to accomplish despite the unprecedented events of 2020. We exited 2020 stronger than when the year began as a result of a series of strategic acquisitions, continued operational improvements and further investment in the core foundation of our company. With that, I will turn the call back over to Scott.

[Scott Graeff:]

Thank you, Gene. At this time, I'd like to open the call up for questions. Brian Soller, Senior Vice President and General Manager of our Lightwave Division; and James Garrett, Senior Vice President and General Manager of our Luna Labs Division, are with Gene and me at this time and also available to address questions. As always, I wanted to ensure that the proper folks were on the call today to address any specific business questions you might have. Donna?

[Operator:]

Your first question comes from the line of Barry Sine from Spartan Capital.

[Barry Sine:]

I wanted to start out, I thought you did a very good job in the slide deck for breaking out the historical 4Q and 2020 results by organic and inorganic and also by segment. I have a similar question in terms of the guidance that you've just issued. If we could unpack that? And I know you just said that by year-end, you won't be able to differentiate OptaSense. But if we could think about the two businesses in terms of historic growth rates and EBITDA margins and then asking it another way unpack the guidance between Lightwave and Luna Labs, please.

[Scott Graeff:]

Yes. Well, Barry, we typically haven't broken that out. I think if you look at what we've said in the past and where we came in organically, kind of 81.5% or so where we came in organically 83-ish on the combining OptaSense. We've always talked about mid- to upper teens, kind of 15% to 20% organic growth. So when you look at -- if I -- if you look at a full year of 2020, with OptaSense in there for the full year, I think on the low end, you would see that 15%. And I think you'd see the 20% more on the top end of that range. I think we continue to feel bullish about being in that mid- to upper teens. Now as you know, the growth is less in Luna Labs and the margin is less. So on the optics side of the business, on the Lightwave side of the business, we do plan on growing. It will grow in the 20s in order to fall into that level of the mid- to upper teens overall Luna. And it will carry a higher margin. So I would expect us to continue to see those gross margins in the low 50s, and I would continue to see the pull-through in that -- somewhere in that 12%, 13% pull-through overall to the adjusted EBITDA line. But right now, what I have in front of me, Barry, it's so new, I don't really -- I don't feel good about giving guidance. I think there'll be a time where we might. But right now, I feel good about the overall number. I don't know exactly the bucket it will come from necessarily. So I'm not prepared to break out that yet.

[Barry Sine:]

Okay. That's helpful. And then on a similar vein regarding guidance, you talked about the historic breakout from a seasonality standpoint, back-end weighted towards the second half of the year. Is that true also for OptaSense? And then from an EBITDA standpoint, I'm thinking that seasonality will be even more back-end weighted. And the reason I think that is because I'm assuming that there's integration work to be had and you'll have lower margins before they're integrated than you will after they're integrated and you've achieved some merger synergies?

[Scott Graeff:]

Yes. I think that's a good point. Their year-end, when they were owned by QinetiQ was $331 million. So we're still trying to get our hands around. I do believe in how we sat down and did the budget, I do believe we'll still be in that -- probably the higher end of that range on the first half of the year and that kind of 46% range and -- for right now, I think we'll have a better flavor for that the more the year goes on, and I'll provide that. But right now, I wouldn't want to get out ahead of that. That's why we reiterate that 44% to 46% because of Lightwave's business prior to OptaSense and even a Luna Labs business is a business that typically, Q4 is better than Q3, Q2, better than Q1. So we do experience that back second half ended loaded business. And Barry, just to circle back to your first question that you asked. Again, I would also reiterate that kind of mid- to upper single digits on the Luna Labs business. So you can take the number that's out there that we just reported, apply a growth rate to that, apply a CAGR to that and say, okay, I know what that number is going to be from a growth perspective. And that will start to give you a breakout of what it is. If you look at, say, 5% to 8% growth in Luna Labs over the 2020 number, you'll be able to start with that and back your way to a degree into what that blended Lightwave number is.

[Barry Sine:]

Okay. I wanted to shift gears and talk about specific customers. You guys tended not to mention customer names too often. One that obviously comes to mind is Lockheed, and I think Lockheed is -- I know you just had a big order, but I think they're a customer across the board for multiple products. Any other major customers that you can call out by name? And one thing that caught my ears during the call is I think it was 2019 when you announced the agreement with Meggitt, and I haven't heard you mention that name since then. I think I heard you mention them again in this call and talk about orders from major aerospace OEMs, and I can guess if they're large commercial jets, there's two major ones. I can guess who they might be. But if you can give us any more color around customer flow.

[Scott Graeff:]

Sure. Well, I can let -- and Brian can jump in here as well. I'll start. And you did hear me mention Meggitt. And we continue to work with them. They had a harder year than us certainly in 2020 due to the pandemic. But we continue to work on that. And I think you'll see -- start to see some movement here as the pandemic weakens. And Meggitt is our partner. They're the long-term third. They're the big first tier supplier in aerospace. So -- and I think Airbus has announced that they're going to come out with an RFP middle of this month on fire detection and temperature -- fire suppression and temperature, right, Brian? So we are -- what we've been working on, and that RFP will come out on the A320, the N-E-O, the neo. So now we will bid -- we will be part of that process just like anyone else. But that is exciting news.

[Brian Soller:]

Yes, 2020 has been a quiet year for commercial aerospace, Barry, as you know. But what we're seeing here early in '21 and that we're referring to there is in the script is the -- we are seeing that come back to life. So Scott already mentioned it, but it's about a year late, but we're going to be bidding on an overheat and fire detection system, or I should say, as a supplier to an overheat and fire detection system with Meggitt, and that will take effect from a revenue perspective, not this year, but that's a big development.

[Scott Graeff:]

Yes, it's a fine line, Barry. We don't want to be -- we don't mention some of those names very often. We wait. You've heard us beat the drum on Lockheed Martin because look at where we've gotten them to. And they are a very trusted partner and encouraged us to talk about our work on the F-35. But you start throwing out big names, and everyone thinks you're just a name dropper. So we do hold back and wait to talk about until we have something meaningful to talk about. That partnership with Meggitt is very meaningful. And we look for that. That's -- that is the long game. That is playing -- that's a marathon. We're getting involved in them, developing product with them and going into these large tier aircraft manufacturers with them. So.

[Barry Sine:]

Okay. That's helpful. My last question, and I apologize for monopolizing this, is you mentioned, and I was surprised by this, that you're still pretty hungry from an acquisition standpoint, and you still have a pretty robust menu on your plate in front of you in terms of potential ideas. What's still out there? First, from a product line perspective, it sounds to me like you've got a lot of the beachfront already covered product wise. Geographically, I loved OptaSense because they were not much in the U.S. and you weren't much in Europe and now you can cross sell. Asia Pacific is a wide open area. So I'm guessing if you could find the OptaSense of Asia Pacific, that would be something ideal for you. Could you comment on your M&A profile? What you'd still like to see to fill out your product portfolio and your geographic portfolio?

[Scott Graeff:]

Yes. First priority here is to make sure that we work together with Brian and his team in fully integrating OptaSense. We bought -- we bit off a pretty big piece with OptaSense and making sure that integration gets done correctly. I don't want to -- I hope I didn't mislead anyone, but I did want to say that there are some things out there that are still attractive to us. That would be complementary to us. I mean it might be -- there's other technologies. We have strain. We have long distance. We have high speed, high resolution, distributed, point sensing through acoustics. Certainly, as you look and you've heard us talk before about it, temperature is something that goes along with that. We have plenty of customers out there that when we're in front of them with a solution they also want temperature. And we have folks that we have preferred partners that will call and say, hey, do you want to go into this proposal with us to provide that. So I think there's some things out there that would be complementary. I'll let Brian add to that, too. But I know as we sit back every year with our Board and go through our 3-year strap, we are constantly looking down range to see what else could be added. We're very focused on the organic growth and the integration of what we just did. That is first and second on our priority list. But to look at things that could add incremental growth inorganically, we certainly have the appetite for.

[Brian Soller:]

Yes. And we're looking forward to accelerate our organic growth through acquisition as well. So we're not looking just to add. So very strategic approach to it. I think you saw that in the 2. We talked about on this call. Scott talked about there are others out there. The photonics space does have a lot of companies that sit from a size and technology profile perspective into our sweet spot, if you will, and we'll look to continue to add where it makes sense. And Scott already mentioned as well, in the sensing side of the business, longer-range temperature and strain measurements. We don't have those today on the communications test side of the business, more manufacturing solutions sort of oriented products. So those are the types of things that we have our eye on. But primarily, right now, the focus is on integrating the business here and getting out of travel restrictions, so we can really do that in earnest.

[Barry Sine:]

And what about geographicals in the sales coverage?

[Scott Graeff:]

Yes. I mean, so the -- if you look at 2020, we were 60% North America, about 30% -- 27%, 28% APAC or Asia Pacific region, 10%, 12% in EMEA. So that should start to evolve more towards Europe as we have the OptaSense locations and teams working. And then the next step would be to look at activity in Asia Pacific. I mean it's not -- we certainly wouldn't be limited by that, but the growth areas and opportunities there are pretty significant.

[Operator:]

Your next question comes from the line of Jim Marrone from Singular Research.

[Jim Marrone:]

Great quarter and great year, gentlemen. I was going to ask about the acquisitions as well. So it looks like that's already been answered. So maybe I'll just maybe -- and I believe you reflected a little bit in regards to the Airbus, but maybe just a little bit more color as far as customer orders in that. So the Lockheed Martin is still considered your largest buyer and purchaser. Can you just provide a little bit more color of other companies out there that are now interested in the products that you have? Will it continue to be in aerospace, what about other industries? Can you touch upon that? And I'll leave it to you to give a little bit more color on.

[Scott Graeff:]

Yes. Thanks for the question, Jim. Brian, why don't you?

[Brian Soller:]

Yes, sure. Jim, yes, you hit on it. I mean, Lockheed Martin is a customer that we've talked a lot about in the last couple of these calls. And I think rightfully so, based on the level of business we've done with them. But the applications do -- if you just look at the government and defense space, that's one of our bigger segments. It's about 16% of our revenues for 2020, on the Lightwave side of the business. All the other companies that are kind of in that same vein. Our targets, and we're actually doing significant business with Northrop Grummans of the world and other companies, Harris, L3 and BAE Systems. So those are the types of companies that we work within that space. We mentioned a couple of larger orders that we've developed last year. Those were actually in that space, multimillion-dollar orders for our polarization products for a handful of applications in defense systems. So that's actually that was a really nice end of the year for us there. But our top two segments are aerospace and communications. And we work with all the major players in those two industries. So aerospace is pretty easy, especially on the commercial side, the Airbus and Boeing, but you've got a whole other tier customers that are below that, and we work with all of those. And then in communications, we work with a broad range of customers. Most working in developing high-speed communication systems, whether it be for core networks or for data centers or backhaul 5G. But really all the big names. For the most part, customers don't love when you name drop specifics based on order flow and that sort of thing. So we tend not to do that. But if you list the top 10 in each one of those segments, we're definitely working with them.

[Operator:]

Next question comes from the line of Dave Kang from B. Riley.

[Dave Kang:]

My first question is for Gene. Regarding your outlook for this year for EBITDA, what are your assumptions as far as the gross margin and OpEx are concerned?

[Gene Nestro:]

Yes. So gross margin-wise, we've been trending on a blended rate of 51% to 52%. And so with that kind of blended across the year, what we have in there for gross margin, and then what I call our OpEx run rate, which would be our OpEx, ex any type of deal or transaction or integration costs. We are slowly seeing that OpEx percentage creep down, and we expect that trend to continue. I think if you look at that, you'll see we've been down in the 41% area. And so we expect that to continue to creep down. Again, what we said is we grow our revenue, our plan is certainly on a dollar basis, we'll be increasing our OpEx, but we plan to increase that at a slower rate than our sales. And so that's still kind of our plan right now. Obviously, if there's transaction costs or things like that, that come into any one quarter, that's going to throw off the GAAP numbers. But underlying that, that's what we're looking at.

[Dave Kang:]

So a couple of follow-up on those topics. First, on gross margin. So it sounds like OptaSense gross margin is fairly compatible with yours. Is that correct?

[Gene Nestro:]

It is. It is. Yes. In total. Yes.

[Dave Kang:]

And then you said OpEx might be trending down a little bit further. But then shouldn't it be opposite as we reopen the economy and people start to travel, your engineers and sales folks will start to travel more. Shouldn't that be driving up your OpEx?

[Gene Nestro:]

Yes. So like I said, on a dollar basis, it's going to go up. But again, we when we do our budget and how we look at the quarters and our forecasting, that's something we try to keep that as a percentage of revenues, pretty much consistent. And so we try to do that as best as we can, so.

[Dave Kang:]

Got it. Okay. That's helpful. And then see, regarding the Lockheed contract, how long -- what is the time frame for shipments? When do you start? And when does it wind down? And can we expect a similar site to follow-on when this program ends?

[Brian Soller:]

Yes. Dave, this is Brian. The order that we announced last year, we're right in the thick of delivering those, and those will all be delivered prior to the end of this year and over the course of time throughout the year. And then we are working on several follow-up orders, both for the F-35 and for other aircraft. A few of which are on the larger side, nothing quite as big as what we've announced last year, but some nice large orders that we do expect to get us follow-ons this calendar year.

[Dave Kang:]

Got it. And then seems like automotive seems to be one of the hottest verticals right now, certainly in the tech industry. What's your exposure to the automotive? Is it fairly material? And what do you see from your automotive customers?

[Brian Soller:]

Yes. Well, we saw a lot of progress in 2020 in automotive in EV and battery testing, and that goes for both our fiber optic products and our Terahertz products. So the way automotive -- the way that market segment works, it takes time. It really takes significant time be kind of specced in and accepted. So revenue-wise, it wasn't one of our bigger segments last year. But if things go to plan, especially with all of the infrastructure being built out around green energy within the automotive segment. And how that ties into battery evaluation and test. We see that as a very nice potential upside for even as early as this year.

[Dave Kang:]

Got it. And then also sticking with automotive, there seems to be -- certainly, the companies that I cover, they are more vocal about the LiDAR opportunities. I mean, what's your angle on the LiDAR development?

[Brian Soller:]

Yes. Let me take a minute to call out an element of our OptaSense acquisition that gets a little bit lost. But within the OptaSense business, there was another business called RIO that you may be familiar with R-I-O, and they make the laser for the DAS system, and it's the #1 laser source in the world for DAS applications. But it's also a fantastic laser source for things like LiDAR. So our play really now is through that RIO laser that we acquired at the end of last year. And we're putting some business development effort into, and we've got some potential for some nice growth even this year with LiDAR applications with that laser source. It's a very long range, very coherent. And it actually -- we think it maybe one of the better sources for that longer-range LiDAR applications. So things like trucking and those sorts of things.

[Dave Kang:]

So to be clear, this is not for test and measurement purpose, but this is actually a module that will be going to cars whenever that LiDAR market develops, correct? That's what you're saying?

[Brian Soller:]

Yes. Yes. So we're vertically integrated on this component. And of course, we use it in our measurement systems, and that's how we operate across all of our products. We're vertically integrated on these laser sources. But in this particular case, this would be an OEM module that would be integrated into a production LiDAR type system. Yes.

[Dave Kang:]

Very interesting. My apologies too for hugging the platform here. But my last question is regarding OptaSense, I think when you made the announcement last year, certainly, the DAS market was impacted because of the pandemic. Can you maybe provide more color as to which verticals were impacted the most last year because of the pandemic? And how should we think about the recovery this year?

[Scott Graeff:]

Well, Brian, you can talk a little bit about that. I mean anything that required our services out in the field, those were impacted within OptaSense, QinetiQ announced that they were going to address that business end of 2019, really before the pandemic started. And so I don't know if they saw that this COVID -- they certainly didn't see COVID was coming. But there were -- anything that went out in the field and that's why you carry a little bit of a heavier operating expense number because you've got some of those folks that you've got to keep on, staff, waiting for that business to come. So they didn't have a tremendously great 2020 due to -- they were very affected by COVID, you want to talk specifically about which field services?

[Brian Soller:]

Yes, sure. And in the oilfield service segment, and that was really the most affected primarily by COVID, but also by the price of oil dipping down as low as it did. With oil being back over $65 or up in that $65 range now. We're seeing some really nice signs of life for that segment. The other main segment of that business is infrastructure security monitoring linear assets. And that business, we started to see kick up in December really, right, as we consummated the acquisition, the order flow started to really improve, and that's continued through to this point in Q1. So we had some signs of recovery that certainly on the order flow side, and now we just have to be able to get out to the field and affect those revenues. And we think we're going to be able to do that.

[Operator:]

Your next question comes from the line from .

[Unidentified Analyst:]

Good evening, and thank you very much for a fabulous fourth quarter and year. Two questions -- two questions, if I could. I want to say that I read about Luna's participation with NASA. Possibly on some technology that might be used on the moon shot, if you could talk about that. And then do you predict increase in sales of some of your tech that detects the micro cracks and engines and wings and aircraft as the pandemic winds down and our U.S. carriers are flying a lot more.

[Scott Graeff:]

All right. Thanks for the question, . Yes. I think, James, that's probably best answered by you for the little last works that's being done, right?

[James Garrett:]

Yes. , this is James. Yes. So we sold some sensors to Lockheed Martin for the Artemis mission, they're building the Orion space capsule that's going to return humans to the moon for that program. These are variants of our corrosion sensors that we've been selling for a couple of years now. And Lockheed wanted to put them on that capsule to both look at inside the capsule for how recycling air inside the capsule was going to affect corrosion. And then also outside the capsule for when it lands in the ocean, for example, and then it's transported back to the launch pad, what that's going to do to those components with the saltwater, what effect corrosion was going to have on the capsule once it came back. So that's the program with Lockheed on the Artemis missions.

[Scott Graeff:]

It was on -- the aircraft wings, right, on the cracks?

[James Garrett:]

And then we actually do have a -- it's earlier stage, more of a research project, but we're doing some nondestructive evaluation development where we're looking at some -- looking at those turbine engine blades and trying to detect early signs of failure through some NDE techniques, nondestructive evaluation techniques, that would allow the technicians to evaluate the blades without having to remove them and being able to reduce those maintenance costs and speed up the evaluation rather than remove them totally from the engine, but that's an earlier stage project right now, not something that could be deployed at this point.

[Operator:]

There are no further questions at this time. I'll turn back the call over to Scott. Please proceed.

[Scott Graeff:]

All right. Thank you, Donna. Thanks, everyone, for joining us today. You've heard me say repeatedly that we believe in what we are doing, and we're on the right path with the right vision. Given the environment we are in, I believe our financial and operational success in 2020 underscores this belief. We continue to believe in our potential and that we're on the right side of a market shift in trends towards lightweighting and 5G. In fact, our capabilities can help to accelerate these trends. Please feel to reach out to Gene, Allison or myself with any questions, and we look forward to speaking with some of you soon. Thank you for your time and interest in Luna Innovations. And Donna, that concludes our call.

[Operator:]

This concludes today's conference call. You may now disconnect.