Q2 2021 Luna Innovations Inc Earnings Call
Good day, Thank you for standing by and welcome to the second quarter 2021 and do not innovations incorporated earnings conference call. At this time all participants are in a listen only mode. Later, and we will conduct a question and answer session and instructions will follow at that time, if anyone should require assist Thanksgiving day.
Conference. Please press Star then zero on you touched on telephone and.
As a reminder, this conference call is being recorded.
I'd now like to turn the conference over to your host MS. Allison Woody Director of administration Ma'am the floor is yours.
Good afternoon, and thank you for joining US today. This afternoon, we issued our second quarter 2021 earnings press release and it.
And we posted to the Investor Relations section of our website presentation with supplemental information for the quarter. If you do not have a copy of the release or the supplemental materials. Please check our website and Luna. He's dot com. We will also post a replay of this call through our website.
Some of our comments and discussions today are based on non-GAAP measures. These adjusted numbers exclude the effect of certain non cash expenses and other items. The adjusted results are a supplement to the GAAP financial statements Luna believes the presentation and exclusion of vs. On it is useful in order to focus on what we deem to be and more reliable indicate.
And ongoing operating performance.
Before we proceed with our presentation today, let us remind you that statements made on this conference call as well as and our public filings releases and websites, which are not historical facts may be forward looking statements that involve risk and uncertainties and are subject to changes and at any time, including but not limited to statements about our expectations regarding future.
Operating results or the ongoing prospects and the company.
Actual results may differ materially as a result of a variety of factors.
More complete information regarding forward looking statements risks and uncertainties is available in the company's SEC filings, which can be found on the SEC's website and our website, 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 develop.
And except as required by law.
After our prepared remarks, Scott Graeff, our president and Chief Executive Officer, Jim <unk>, Our Chief Financial Officer, Brian and solar our Chief operating Officer, and James Gurry, Senior Vice President and General manager of our Luna Labs Division will be available to take your questions and at this time I'd like to turn the call over to Scott.
Good afternoon, everyone and thanks for taking the time to join our call.
I'm excited to be with you today announcing record revenue for the quarter and significant progress and the integration of our largest acquisition after sense.
I share with you last score this was going to be a year of focus blocking and tackling for Luna.
Essentially an inflection point, where we are building on all the processes and systems, we put in place throughout 'twenty, and 'twenty, and which will allow us to scale well into the future.
In addition, we will continue to invest and our business through this year and into 2020.2 because we see an abundance of opportunities for strong and rapid growth.
In order to bring discipline to evaluating the vastness of these opportunities we created a new role this senior vice President and head of strategy as.
As you may have seen at the end of Q2, we announced that Bachelor Banerjea joined the Luna team, adding to our bench strength and support of and maximization of our profitable growth both organically and through acquisition.
We will continue to be an acquisitive company sharply focused on building our capability and expertise in fiber and.
And of course, we will only do those deals that makes sense from both a financial and cultural perspective, 1 of our key priorities will always be the prudent and thoughtful deployment of capital.
Last quarter, we made leadership changes in sales and operations and human resources, and I believe that incrementally, adding bash Dar to the team positions us well with the leadership, we need to execute value, creating strategic moves.
It was critical and then we get the right people into the right positions. So that we are prepared to adjust quickly to changing market conditions and customer needs as well as innovating with speed.
Few weeks ago I brought our leadership team together in person for the first time and I had a couple of goals in mind for this meeting first I felt it was important for us to spend time together to begin to build a foundation of collaboration and trust.
Second we began to work on our updated strategic plan laying out the landscape ahead of us and beginning to categorize what we see as near and medium and long term opportunities.
I'm pleased to say the meeting was a huge success as I looked around the room I was grateful for the amount of talent and we added to our management team in such a short period of time I now believe I have the right people around the table.
I'm also inspired by the impact our products have on our customers and society.
Whether it's making bridges and dams safer or 5 G networks more reliable more secure and key government and private industry assets Luna products help make the world a better and safer place.
Luna has interesting options and I wanted to give you some visibility into how we think about them.
We sit and rarefied air with the applications of our fiber technology nearly limitless. While this is incredibly exciting for both near and long term growth. It also requires careful planning.
It would be easy to get distracted by trying to chase every possible application of our technology. So ironically, we're being challenged and a very good way to be extremely thoughtful about where we can achieve achieved near term success with existing resources, while strategically planning for medium and long.
Her term market expansion and thankfully.
Thankfully, we have a strong team and excellent support and guidance from our board to help us navigate this balancing act.
Luna is extremely well positioned to take advantage of the growing needs across multiple industries for solutions built on the benefit of fiber sensing technology. We are the market leader with thousands of systems deployed and operating in the field today.
Our sensing solutions are already deployed globally to monitor critical infrastructure like bridges and tunnels dams roads railways and pipelines, where we give operators and municipalities access to critical information regarding the health and status of their assets.
We stand ready with time proven solutions to improve the safety and security of infrastructure as new market drivers emerge.
And the announcement last week by the U S and at about 1.2 trillion dollar infrastructure Bill is a good example of 1 starts potential driver details need to be addressed before any funds tied to that bill make their way to Luna.
I wanted to give you all the flavor for our strong position in this space and our readiness to take advantage of the changing trends.
1 recent and relevant example comes to mind.
Last month, we closed the sale for the use of our opto sense sensor and fiber optic sensors too early warning system for a large Tam and South America.
I use. This example, because there are thousands of similar dams globally that can also benefit from our technology and as you've heard me say before we're just getting started.
We will focus on resources, where the most value can be created and the short term while strategically planning for the long term, obviously customer input and collaboration is key to this and we know from experience that this approach leads to the most robust success on.
Another example is where we collaborated with Lockheed Martin using our Ob are 6200 and in this case, we solved critical issues, which ultimately led to Luna being the sole source supplier of measurement technology for the F 35.
I wanted to share a few more thoughts about our long term prospects and some trends that we're seeing as well as the impact of Covid before I get into the specifics of the results for the second quarter.
As we've discussed before Luna does have some seasonality and this business typically earning from 44% to 46% of full year revenue in the first half.
And the first half of 2021 was no different.
We delivered 44% at the midpoint of our guidance range and are on track for the year, which is why we are comfortable reaffirming the March 2021guidance range at this time.
And as a reminder, that guidance is total revenue of 122 to 127 million and adjusted EBITDA of $16 million to $19 million.
We continue to see some very good strength across the totality of our sales pipeline and I mentioned last quarter, some changes to our organizational structure, including several promotions within the team to great tighter management of sales across the portfolio.
Wowing us to capture the potential in the pipeline and certainly.
Certainly we are still seeing impacts from the ongoing pandemic, which affect timing of sales cycles as well as certain parts of our supply chain.
In fact, I want to highlight something that we have not seen previously with respect to both our supply chain and to our sales cycles.
And this affects our business in several ways first it makes it more difficult for us to get the components, we need to assemble our products and ship to customers.
Second it affects our customers ability to take deliveries of our products as they are waiting on delivery from other parts of their supply chain.
Third the more general disruptions that come from Covid like travel limitations can delay our project work and the field, which in turn delays our ability to recognize that revenue and lastly, I will note that as many have felt in the first half of 'twenty 'twenty..1 these factors that have a particularly large impact on our sales on.
<unk> in Asia throughout the first part of the year.
This has not to date materially affected our ability to deliver product to customers on time. However, we are getting indications that some parts, which we would normally receive in a number of days are taking longer and we continue to keep a close eye on the supply chain and any potential impact on our.
D to manufacturer we could.
Actually be affected by this if timing of deliveries do not revert back to a more typical delivery pattern.
Now I'd like to move on and some of the financial highlights for the second quarter.
For the second quarter of 2021 total revenues were up 50% to $27.9 million compared to the prior year's quarter for the first half revenues were up 52% versus the first half of last year.
I think it's important to note if we look at growth in terms of apples to apples or as if we owned the opt a sense at the beginning of 2020 organic growth for Q2 was over 20% and the first half of 2021was in the mid teens.
The Lightwave segment had an increase of 70% year over year to 22 million and total revenues again, if we looked at growth on an apples to apples basis Lightwave organic revenue for Q2 was up nearly 30%.
Luna Labs revenue was $6 million up 6% versus Q2 of 2020, We reported an operating loss of 1 million for Q2, 2021versus operating income of $1.8 million for Q2, 2020. The largest driver of this year over year decrease and operating income was a 1.5.
5 million of integration transaction and amortization of intangible asset costs relating to our recent completed acquisition as well as continuing portfolio activities.
The decrease was also partially due to product mix as we saw stronger levels of sales this quarter in certain products that carry lower margin.
Reflecting the same dynamic I just discussed for adjusted EBITDA, We delivered $2.1 million and Q2 versus $3 million in the prior year period.
This resulted in an adjusted earnings per share figure of 6 cents for Q2.2021, compared with 6 cents for Q2 in the prior year period.
Now, let me discuss lightwave in more detail.
As a reminder, our Lightwave solutions focus on 2 areas sensing and communications testing for the second quarter 2021 and the revenue growth I. Just mentioned was driven by both the acquisition of Optus sense and strong commercial sales and legacy Lightwave comms testing business.
Let's dig a little deeper into the sensing segment, which you may recall is a segment, where we use the fiber as the physical sensor to create smart materials and structures.
Revenues grew by 63% versus Q2 last year driven by both the acquisition of the op defense product lines as well as legacy Luna products.
As a reminder, we added the optics sense distributed and acoustic sensing or das technology to gain access to fully distributed measurement capabilities over long range applications to augment our already industry, leading line of fiber optic sensing products.
The addition of long range distributed capability to our offerings establishes Luna as a new global market leader in fiber optic sensing with diversified geographies and applications.
And while on the topic of opt a sense, we had important integration milestones and Q2.
We successfully completed the integration of the functional support elements I T HR and finance that were previously handled under our transition services agreement with kinetic.
We have more integration work in front of us as we look to maximize our growth potential, but the heavy lifting of integrating the back office function is now largely behind us.
Staying with our sensing vertical we made important progress on several strategic growth areas. We saw a significant increase and oilfield activity with campaigns for major North American operators, and and extended seismic mapping jobs in the North Sea and.
In addition, bidding activity in Canada, and the Middle East is increasing.
Despite challenges caused by the pandemic, we have delivered a number of major contracts to south American customers for infrastructure monitoring further positioning Luna as a trusted supplier and recognized world leader within these markets.
We made progress and expanding into new markets with traction gained and the telecoms industry. Following an extended period of investigation, a major U S. Cloud services provider chose to invest and Luna sensing solution to help monitor their fiber optic networks.
And we launched the sixth generation of our acquisition and interpretation platform for linear assets like borders and pipelines.
And this release, we feature a simplified layout and display making it easier to use and we also included and auto tuning capability using machine learning, which helps to accelerate setup time.
Now switching to communications test vertical.
These product lines grew strongly 79% in Q2 versus the prior year period.
For some additional clarity it's important to know that the REO laser business acquired through the acquisition of off the sense is included in our Comms test results without after sense, our legacy Luna Comms test business grew more than 40% and Q2 versus last year.
With the addition of the REO laser products and the general Photonics products. We added in early 2019. This business is now 50% test and measurement for communication devices, and 50% optical component and laser modules for a variety of photonic applications such as medical devices.
Sensing systems and Lidar.
If we look at the legacy part of Comms testing, our core products, the Ob Eh and Ob or grew nearly 100% on a year over year basis, driven by a continuation of the strong commercial environment. We discussed in Q1 and the continuation of deliveries of our newest product and this category the <unk>.
We are 6200.
You'll remember that last year, we announced our partnership with Lockheed Martin and their order for over 100 units and Q4.2020.
Our deliveries the Lockheed have proceeded without interruption.
In general comps testing drove significant overall improvement and commercial sales over last year with multiple system sales to large corporate customers.
And now let's move on to a discussion of Luna Labs, where as a reminder, we leveraged third party contract research and to build a portfolio of technologies.
These technologies, which are commercialized through direct sales distributors or license agreements are outside our core strategic fiber optic offerings and.
In terms of the second quarter Luna labs saw many positive business indicators as employees returned full time to the office government customers, we're able to travel again and tradeshows resumed in person meetings.
For Q2, 2021 Luna last reported 6 million and revenue a 6% increase over Q2, 2020.
Returning to in person Tradeshows allows us to reconnect with customers and demonstrate some of the new products. We have developed recently for example in our existing corrosion monitoring product line and we've made progress expanding aerospace sensors in the automotive markets. We recently delivered an order to Jaguar land.
Rover in support of a 2 year 400000 kilometer test across North America.
Jaguar land Rover is using the Luna labs sensors to forecast new material behavior as they investigate next generation lightweight materials.
Before I turn it over to gene for a deeper dive into Q2 results I want to make a few comments on the continuing effects of the global pandemic building on the comment I made earlier Luna.
Luna operations have only been slightly affected by COVID-19, pandemic, thus far in supply chain and and sales cycles.
For supply chain, we've largely been able to mitigate risk for electronic parts by building in more safety stock and working closely with our supply partners to ensure delivery.
Going forward, we are taking steps to eliminate hard to get parts and replacing those and our designs with parts. We know we can more readily source.
And industry predictions suggest that we should see some easing of the situation in Q4.
While we don't currently predictor situation will adversely affect our results we want to be clear that we do rely on a steady supply of electronic parts and boards that are increasingly difficult to source.
Finally, with regard to the timing of sales cycles, we did see some impact from the pandemic this quarter as certain geographic regions have experienced limited travel and in person meetings. These have only been timing issues and we have seen all affected sales ultimately close but I did want to mention it especially.
And right in light of recent news about the Varian.
In summary, I'm extremely pleased with the progress so far this year.
We will continue to focus on fundamental blocking and tackling as well as building for the long term I'm incredibly grateful for the dilutive team for their focused work and continue to be confident that we have the right strategy to capitalize on opportunities and our growing markets I'll now hand, the call over to gene for more of that.
<unk> financial details on the quarter Jamie.
Thank you Scott.
Scott mentioned, the addition of Bash guard to our Luna leadership team I have also strengthened my finance team.
Ray Matti joined Luna, a few months ago as our VP of financial planning and analysis Ray has over 30 years of F P and a and finance experience with well known companies such as Armstrong industries T connectivity and shop Vac.
He has already begun to build our S T and a function to support our continued growth. We also recently added Andy Brown as corporate controller and he has over 22 years of corporate accounting experience with advance auto I believe we now have a strong finance leadership team to support Luna is growth.
Before I proceed I want to note that our reported numbers include the results of the 2 acquisitions, we completed towards the end of last year.
New rich technologies, and up defense and their related integration transaction and amortization expenses. In addition, our results also include expenses related to our continuing portfolio activities with that as background and I will now shift to cover our second quarter results and.
As Scott noted our revenues for Q2, 2021 were $27.9 million compared to revenues of $18.6 million for Q2, 2020, representing a 50% year over year increase.
The increase in revenues was composed of a 70% increase and our Lightwave segment, and a 6% increase and our Luna labs segment compared to prior periods.
Within the Lightwave segment year over year growth was driven by our acquired businesses and strong performance from both our sensing and our communications test businesses, including particularly strong commercial sales and our communications test business, resulting in double digit growth Luna lab showed improvement compared to Q1 growing <unk>.
6% and Q1, 2021 versus Q2, 2020. Our gross profit was approximately 14 million for the quarter compared to $9.5 million for the same quarter last year, representing a gross margin of 50% and Q2, 2021 compared to 51% and Q2.2.
And in 'twenty gross margin declined slightly driven in part by higher sales of lower gross margin products and lightwave.
Gross margin and quarters, 1 and 2 of this year include 168000 of noncash amortization of inventory step up related to our recent acquisitions. This number will decrease to 100000, and Q3 and 70000 and Q4 at which point the inventory step up will be fully amortized.
Operating expenses were $15 million and Q2, 2021vs 7.7 million and Q2, 2020. This increase was primarily driven by the operating expenses of our recent acquisitions increased head count to support our growth 991000 of integration and transaction.
Loss related to our recent acquisitions and our ongoing portfolio activities and 320000 of amortization related to our op defense acquisition.
We recognized and operating loss of 1 million and Q2, 2021 compared to operating income of $1.8 million and Q2 of last year.
As a reminder, the operating loss of 1 million and Q2 'twenty 'twenty..1 includes the amortization in both cost of revenues and operating expenses that I just discussed.
Acquisitions are an important part of Luna strategy and so we will continue to see impacts to gross margin and operating income from these amortization items, assuming we continue to be acquisitive. While these amounts are not insignificant. We believe we can drive substantial incremental value to Luna from our acquisitions to give you a sense of that.
Magnus to Luna is total amortization expense for the quarter was 773000 and largely driven by our acquisitions.
We do disclose annual amortization by year in our 10-Q. So you can refer to it for future amortization expenses as a reminder, if we acquire additional companies we expect to have additional amortization related to those acquisitions.
Net loss for Q2, 2021 was <unk> 2 million or a loss of 1 cents per share compared to net income of $1.4 million or 4 cents per share for Q2, 2020 income tax benefit for Q2, 2021differs from our statutory rate primarily due to equity compensation we.
Estimate our 2021 effective tax rate to be 18% to 20%.
And finally, a key metric, reflecting our underlying operations is adjusted EBITDA as Scott mentioned adjusted EBITDA was $2.1 million for Q2, 2021 versus <unk> 3 million for Q2, 2020. Adjusted EPS was 6 cents per share for Q2, 2021vs 6 cents.
For Q2, 2020.
Let me now move to the balance sheet, we ended the quarter with approximately $12 million of cash and cash equivalents compared to $15.4 million at the end of 2020. The decrease was largely due to the cash payment of accrued deal related expenses during Q1.
Our working capital was $47.8 million at June 30, 2021 compared to $45.4 million on December 31, 2020.
Remember that at the time and the off Defense acquisition, we announced a new debt facility comprised of 2 separate financing vehicles, a term facility and a revolving facility.
So at the end of the second quarter, we had total debt outstanding of $17.9 million of that amount $10.4 million is and term debt and $7.5 million was drawn on our revolver.
We have access to an additional $7.5 million and the revolving credit facility should we need it.
I remain comfortable reaffirming our guidance today, given the vast opportunities that Luna has in 2020, 1 and beyond let me give you some additional color related to how we see the second half shaping up in terms of revenue for the second half, we expect that revenue will be skewed more towards the fourth quarter.
As we mentioned, we expect 54% to 56% of our full year revenue to occur and the second half of the year.
We typically realize about 30% of our annual revenue in the fourth quarter and this year, we expect a waiting to be even heavier towards Q4.
We've been building backlog and our sensing business throughout the first 2 quarters and when Covid restrictions and supply chain delays ease we will be better positioned to convert our backlog to revenue.
We expect that gross margin will expand slightly and the second half from the Q1 levels as our fixed costs are absorbed across a higher revenue base. We also expect a significantly lower level of integration and deal related costs and the second half of the year.
Versus the first half as the bulk of our integration costs are behind us.
In summary, I'll reiterate Scotts comments and Q2, we continued to work on basic blocking and tackling refining the back office systems, We recently implemented and integrating our recent acquisitions and importantly, we continue to further invest in the core foundation of our company.
Scott I'm also thrilled to welcome our new colleagues to the senior team they've already begun to dig in and make an impact on our processes and performance.
I feel really good about the finance team, we now have in place and feel we now have the right capabilities to support the organization's growth and critical strategic decisions with that I will turn the call back over to Scott.
Thank you Jamie at this time I'd like to open the call for questions, Brian Solar Chief operating Officer, and James Garrett Senior Vice President and General manager of our Luna Labs Division are with gene and me at this time and are also available to address questions Leah.
And.
I think he is only my day to ask a question. Please press Star then the number 1 key unattached stone and telephone.
The question has been answered or you wish to remove yourself from the queue. Please press the pound key.
And your first question comes from the line of Jim Malone from singular research. Please go ahead.
Yes, Thank you for taking my call.
So my question is.
Just on regards to the.
Affirmation of guidance and.
Match and that there's headwinds and in terms of on the supply chain and so I'm just trying to reconcile rack and that you recognize there's headwinds and the supply chain, but yet you're still reaffirming that guidance and.
So maybe if you could just give a little bit of color as far as and.
And all your justification for reaffirming guidance given given those headwinds and then yeah.
Sure I mean, I'm happy to address that Jim. So you know my approach to guidance is is open.
Open honest and transparent what I see in front of me is is what I will pass along.
And to shareholders and I wanted to make.
I wanted to make reference to some of the things that we had seen that we hadn't seen you know.
On the supply side and some of the slippage of the of the of the revenue I was pleased to see that there were some big deals you know I referenced that large dam.
And in South America that didn't get done due to some COVID-19 people in the office not and the office not there for us to install but it did happen and the first week of July we've all been there, where we said things have pushed around and pushed out and.
And then you get to the end of the next quarter, and then and they haven't been done yet and you realize that that was a sales guy kind of telling you something but what I've seen and what I see laid out.
Strength in my ability to reaffirm guidance and it's what I see in front of me and I believe we can work through the supply side and the challenges that we have certainly on our side, we're working through them, it's a matter of.
What what will our customers see and we've certainly reached out to many big customers and talk through what they see and everyone believes that.
And it won't be the strong headwinds that we will see some relief here.
And not get worse and.
And with that all I can do is lay out what I see today that you know the landscape in front of me supports reaffirming guidance if I didn't feel like it was that way I would certainly pull back on it but that's that's what we see we met as the team you know.
Brian and myself gene all the all the the lieutenants out there that are managing the day to day and that and we all came back with the same answer so yes.
Yes, what we chose to go with you here today Jim.
Alright, and I appreciate that and I and I also recognize that and now your second half of the year as you typically your stronger part of the year. So I recognize that our book, but let's just say these headwinds.
Persist.
So will that be impacting like cop line or bottom line or a combination of the 2 are and can.
Can you give us a fan club.
Factory, where it's hitting the income statement.
Yeah.
I think it's a combination of both you know it all depends where it is and you know we saw some.
Some things here in Q2, and and really the first half of the year and getting our sea legs underneath us with Optus sense, you know theres a lot of fixed costs associated with optus sense, because they don't just sell a product.
And they sell a product and and installation and a service. So we have folks that are sitting around waiting to go out and do that installation. So if if things get delayed and pushed from 1 quarter to another or they get pushed around from 1 month to another.
There are fixed costs that we're having so if it all depends where the lightness would happen on that revenue, but it could affect.
Both the top and the bottom we will certainly manage operating expenses and like gene said.
And we won't see a lot of the integration costs that we saw in H 1 in the second half now that doubt it.
We are we are through a lot of those so.
You know, we were serious and seeing a lot of strength on the commercial side right now the commercial environment is super strong. So we're not seeing backed off.
And in our orders and our our commercial activity.
And it's robust.
And it's moving things around and being able to go out and deliver on them.
Legacy Luna was a lot more I don't want to say predictable, but just we could see the landscape down there was a matter of getting a product off the dock with Optus says I have to coordinate much much more with the end customer.
Like I said with that large.
A very large order.
Of the dam and in South America, you know Theres a lot of paperwork involved and you have to coordinate with having them. There you can't get on site without them.
Okay.
And I appreciate that so go on going on with that then.
And so as that part is that business part of the Lightwave segment on.
It is yeah, we've rolled that in that all rolls up to 2.
Brian.
Okay, and so with regards to lightweight.
Hum.
Now is the.
Lockheed Martin and still.
On the same trajectory or are you like diversifying away from that by getting into these more infrastructure plays or can you just comment on the on the nature of the business and where it's gone.
Yeah sure Hey, Jim This is Brian I'll take that 1.
We're still on track and making really good progress with Lockheed Martin and the deliveries against the order we announced.
And we announced it was a Q4 order we announced in Q1, that's going very well you know we are working on a plan to diversify those revenues and to grow outside of the.
The 1 aircraft, which is the F 35 that were currently tied to and and we have made good progress. We've got other other aircraft now that we've.
And are in the early stages of working with and beginning to make deliveries too. We also have other applications outside of aircraft that we've started to see heat up and in particular and the data center market. So that's all going to plan.
And you asked about you know infrastructure, we're certainly seeing infrastructure side of the business come back. This year that was part of the business that was affected more by Covid last year, it's been.
It's been very active this year, and especially with the announcement of and its infrastructure.
Infrastructure Bill here recently, we're looking forward for that segment to grow well into the coming years. So.
And that kind of hits on the 2 the 2 questions you had there.
Yeah, Okay, great and you're anticipating a little bit more traction once the live events and the.
The wife conferences started off price and can you tell me again and when when you're anticipating that.
Well they've started they've already started.
And there's been some some cancellations we've seen due to recent news related to the Delta variant, but in general things are starting to open up.
And people are meeting more lives certainly than they have over the last.
15 months, Yeah, I haven't heard the latest but E. Com in September was certainly planning on being.
Face to face.
And that was late.
Middle of of of September in and he goes and Burgundy or something like that.
So as far as I know, it's still face to face Jim and I think that is a big thing with getting people back together.
Yeah, Okay. Thank you for your answers John.
Thanks, Jim.
And your next question comes from the line of Barry Sine from Spark on capital Securities. Your line is open.
Hey, good afternoon folks.
Wanted to start off asking about off the fence.
Integration and correct me, if I'm wrong, I think you've said that you.
You're going to push some of that activity into next year.
And make sure that they can they're not disrupted this year I think you also said debt.
And you've completed it and on site in person all hands on.
Meeting recently, which would be interesting.
Given.
Travel restrictions. So how are you integrating that and I and I recognize the challenges and they'd be.
And our European operation and.
And COVID-19 related travel restrictions, but could you kind of give us an update on the integration and have you been able to get over there and actually visit them.
Yeah, we have not we're not what I referred to.
Larry was a.
Our staff meeting of mine and where we brought everyone together into our Atlanta office, and we held a face to face there that was everyone, but Jamie Pollard, who dialed in from a from the U K. So all of the other direct reports and a lot of Brian's direct reports where in that meeting and there's probably about 15 of us.
And.
For a couple of day strategy session and get together, Jamie was the only 1 who did not travel so.
So we were not able to do that we did and I also referenced on the call that we've made progress and have for the most part.
<unk> completed the integration of finance HR I T kind of the services that were on our TSA with kinetic. So we've completed those what we look forward to is the integration of bringing sales together and that will.
Like I said last time, we will push that.
Into the second half of this year and into 2020.2 to not be disruptive to them, but that in person meeting with everyone, but Jamie we have not traveled there yet and they have not travelled here yet in regards to the U K.
Okay, and then a.
Shifting gears and it was a pretty significant news announcement and the quarter and I wanted to get your kind of generic generic comments and I'm, referring to the condominium collapse that occurred in sunrise.
Sunrise, Florida and Theres no.
Announced cause of that but there is no media speculation about structural issues and not just residential buildings, but theres a number of commercial buildings around the world that use.
Similar type construction techniques. So I don't know if you're a.
Sensing solutions are applicable for structures like that how you would go about it and.
Now that you have a new head of strategy, if youre looking that that yeah. It is it.
Is it your opinion that there may be a more significant market opportunity down the road now that perhaps we may see a zoning laws change and require some type of sensing.
Sensing in structures that would give you a bit of a early warning.
For events like that can you just generally comment obviously not comment on that specific event or just comment on how that market may develop.
Yeah for sure.
We have spent a lot of time on that as you can imagine a good chunk of our.
Of our strategy session was in regard to structural health.
Not only in regards to that event itself, which is.
And as tragic there was 15 minutes that went between cracking on the pool deck.
Until that building collapsed I mean, they just had no monitoring at all had we had fiber on that building.
It would have been much much longer than that so I'll, let brian bachelor's with us here as well obviously, we spent a lot of time, he's probably spent his first.
So kind of 2 months here kind of going through a lot of these things.
But I'll, let Brian talk about how we're chasing that and what we're going after.
In regards to that but we have a lot of interesting ideas and have talked to some municipalities about this structural health yeah. So great question Barry.
The fact of the matter is we have systems all over the world thousands of systems doing this already.
Monitoring structures for.
The overall safety well being of inhabitants et cetera.
And so this wouldn't be a new a new set of applications for us it would be a new market because to date as you mentioned the you know the regulatory.
Environment does not require such systems.
But yes, we're certainly working with our contacts and and behind the scenes.
And with localities municipalities.
Educate folks on the.
And the benefits of using systems like ours to enhance the safety of.
Of residential buildings and it wouldn't be a new thing it's something we have a lot of experience doing and our mission is to enhance the safety security and connectivity of people. So it hits home for us and it's something that we'll we look forward to adding.
And it's adding value to.
And I know, it's still early going.
And you get it in the sense that we may see a change and the regulatory environment around the country, where there may be requirements and to put structural sensing and there and if so when might we see some impact and.
On the financial statements I mean, I know, it's going to be a couple of years, but might that be material and when might that occur.
And that's about right that's about how we're looking at it we certainly are.
And we certainly do believe that.
That the situation may evolve and the direction of requiring this type of monitoring and in fact, we've seen this and.
With our customer base and in Europe.
And and other places, particularly in southeast Asia, where certain types of structures or buildings are starting to require.
Sensing systems for early warning and detection of issues. So yeah.
We just don't see any reason that that wouldn't necessarily happen here as well and it's very early days and these types of regulatory things are hard to predict so I will make that caveat.
Yeah, but I do believe it's a matter of when I mean, the the energy and activity on.
You know from the insurance agencies to the regulatory agencies I mean, there is a lot of talk.
And because we are actively out there telling them.
We have the fiber we have the solution.
Where the seat belt to the accident here, a little bit and and and.
So I believe it is win and that's a big question, but I do believe that's where we're going.
Okay. That's really helpful and my last question I wanted to circle back to.
And.
And it sounds like I'm hearing a couple of things that youre kind of backend loading the guidance in terms of when we'll see the revenue you're.
You're talking about supply chain issues, many of which are outside of your control and you know obviously, we hear about that from a lot of companies and a lot of industries. So that's not unique to you, but it seems as if you know where I'm kind of handicapping it.
And there is some very small, but perhaps growing probability that maybe you don't quite make the guidance numbers. This year. If you kind of handicap that for us and I guess, if you didn't know anything that Mrs would probably show up and the first few months about next year.
Yeah.
Like I said, when we when Jim danced around that that question a little bit I I.
I take guidance very seriously and and we went out and I talk to gene ended James and to Brian and to ease and to Jamie and to solve and I mean, this senior team and talked about it guys. What do you see what what do you see it down to kind of talk to the customers talk to our folks in China, 2 in Japan to Europe.
And we're looking at the pipeline like I said, if I didn't see the activity the commercial activities. So strong or if we saw something I gave sites to some things that we just hadn't seen and maybe that was adding the optic side of it and such large orders million dollar orders.
Teetering on not happening by June 30th and happening on on July 8 and there's a big movement. When you think of you know 28 versus 29 or 29 vs 30, I mean.
But what I can tell you this Barry I would not go out and give the range.
And I wouldn't I wouldn't list, 1 and 22 to 127, if I didn't believe that's the range we were going to be in.
I just it just doesn't do me any good to do that.
So.
You know.
Yes, I'll take the bruises if that happens, but I can tell you you won't be surprised by we will give you insight into what I try to be as transparent as I can with what we see and that's why I wrote all that language around what we're seeing and there's some strange things that we're seeing on the on that supply side.
Not necessarily supply to us supply to a lot of our customers and that's what hits us really outside of our control.
Right. Okay understood. Thank you very much Brookfield and my questions.
Sure.
Thanks, Barry and once again, if you would like to ask a question just fast and number 1.
Price the pound key.
If you would like to the day questions expressive Halki once again to ask a question just price.
Once you get that stuff.
Once again, if you would like to ask a question just press the star and and a number 1 key on you touched on.
Telephone.
Okay.
And your next question comes from the line of Dave Kang from B Riley.
Your line is open.
Thank you good afternoon, and my first question is on Scott I think you said.
And.
Remains very strong.
Can you give us you know.
And maybe what the book to Bill was maybe without a specific number was well over 1 or barely over 1 and your color on that.
Yeah, I'll, let Brian talk about that we we went through this in detail at 1 of our finance sessions here and I'll, let Brian.
Brian and operations perspective, you want to give some of this on.
And yes stronger yes it was.
For 1.
And it was it was.
And and a nice kind of range.
Without giving an exact number and the.
And the low <unk>.
1.1.1 kind of in that area, which.
And it was right where you want to be when you're looking.
We're going to continue to grow.
So the.
The bookings were there.
We did see some some things here and there related to cause fluctuating the revenue cut.
And related things, but the bookings were right on target.
Got it and then on.
Some of your peers.
That have reported already.
On their assessment is.
Top line impact and.
Revenue impact has ranged from the low single digit to high single digits and.
And margin impact has been around 50 bps to 150 bps.
Care to characterize how and what you know what kind of impact you experienced and the second quarter and maybe what to expect and third quarter. If there's any.
Yeah, I mean, like we mentioned on the call and and I I hit a little bit of it and gene hit some of it.
We have we have a level of fixed costs that are sitting on the off the scent side. So if if we have some things slip we will see some margin creep on that as well you know so the COVID-19.
Pandemic as it relates to pushing things around on a set customers say well why didn't you just come next month next quarter.
Rather than than now so that does have an effect on us and we made some reference to that.
In regards to second half gene do you want to talk about that.
Yes, sure so like I mentioned.
We are expecting larger revenue and the second half and based on <unk>.
Past you know years, we think Q4 this year is going to be a little heavier than what we've seen and in other quarters and.
And to Scott's point, if we get out and can perform these services.
We see.
You know actually some margin improvement.
From the 50% again, all predicated on on our folks being out there and unable to install and travel to where they need to go to.
Got it and then on on a per.
Terahertz.
Can you touch just talk about the pipeline and I think.
During 1 of the.
Recent meetings I think you mentioned about product acceptance and.
The point was debt.
Before you are selling and onesies and Twosies and and.
Volume is definitely up and getting larger just can you give us an update on debt.
Yeah, So we're making really good progress on that.
Getting qualified into applications, where systems will be used and production rather than and kind of R&D type environments.
Michael does take some time, so it's not going on it's not going to be and.
Material or really a major impact.
And any of the quarters this year, but looking into next year.
Is when we'll start seeing net.
The qualification process will.
It will take about that long through the end of the year and then.
We will be good to start getting <unk>.
And that ramp.
And it's been and a couple of areas predominantly.
The 2 the 2 most.
Significant areas are and EV battery space, and then and.
Plastics.
Manufacturing.
So 2 unrelated and user markets, but similar similar function and the product.
And then EV battery.
Obviously, we know who the biggest 1 is I mean are there multiple customers and are behind that the customer.
Yeah, we're working with a half a dozen or so folks and in that space.
With several of our products in fact, both on our terahertz product and our Odyssey product.
So yeah. We're yes, we've made good progress over the last year and kind of going after those those applications.
And growing our footprint there and so yeah. There are some names that are a little bigger than others, but David as you know every car company and the World has a <unk>.
<unk> roadmap to 2 electrification debt is.
And coming out as fast.
What about on the solar then I mean, you know with our on Nevada, where you live, but you're in California with drought and all of that.
Solar plus battery seems to be a pain.
Larger roles I mean have you looked into that solar and batteries market.
It's not as much of a play there we do have a couple of areas within the green energy market that we're going after.
Taking energy off on offshore wind farms is 1 of them on the structural integrity for for for.
For wind turbines those sorts of things carbon sequestration mapping, but those are kind of the areas that we're looking at and the green energy market.
Got it thank you.
Alright, Thanks, Dave.
Yeah.
And your next question comes from the line of Michael He May come from a private investor. Please go ahead Sir.
Yeah, Hi, gentlemen, a couple of questions for you 1 is an investor who came over from API.
I got used to them managing to lose tree sense from every corner and I'm, hoping that that your plans are not to continue on operating loss and to their perpetual future.
And that's kind of 1 question.
Yeah.
No no there's no plans on on continuing losses, if you look at the operating income and and I would suggest you know if you can.
And look from API you. So you've seen the changes that we've made especially in the last kind of 4 or 5 years here and what we've done but.
But we believe in order to set up the.
And the right team for success the additional operating expenses that we have the things that go along that are non cash and in this amortization and inventory step up it does hit that we try to break that out.
And $1 million of operating.
Loss, we tried to spell out well you know there was a million and a half or $2 million of of this amortization and things like that so no. It's not our it's not our plan.
But it does take time to get through some of these things as we look at being acquisitive and.
And bringing some of these things on board.
Right right so you've had.
Again, as an investor I noticed a lot of.
And what looks to be fairly expensive, new hires and promotions and the quarter and I'm. Just curious are you fairly are you pretty much done with that for a while and our and have you got who you need to go forward now yeah. I would say you know some of those things we had laid out.
Over the last 2 strategy sessions in the team to fill.
And some of these things come along you know with when they come along you kind of jump on them a little bit.
We talked about.
Bill Van Anglin and in human resources someone that I met years ago.
And when he was at May calm and Fidelity and then and then Bash car most recently someone I met.
During the day May Com transaction. So these are folks that debt high talent that you bring on board, but yeah. I believe this team is filled up I tried to make reference to that when I talked about looking around the room and going and such a short period of time filling seats that debt we needed to fill.
Folks that not where we've been not where we are but where we're going and I believe with some of the additions that you've heard me announced over the last couple couple months are critical positions on where we're going.
But yeah, I would say I have the team right now we have the team together.
And to go forward on this okay.
Okay, and it's good to hear.
And I guess another question around this this big infrastructure build outs.
I guess just about to be signed I'm wondering what youre, putting on are you doing anything for obviously youre doing anything with integration partners to kind of get into the government business and kind of get position with them or are we waiting to see it get signed first on.
No no no we've been working on this for for a year, we have lobby firms up there we have folks up there and I'll, let Brian because he is knee deep in this infrastructure. He's our infrastructure bill expert here. So I'll, let him talk a little bit about some of the places that we're again.
And we worked through several associations within.
Capital Hill side of things in terms of lobbyists and industry organizations.
To ensure that our message is.
Is getting put in front of policymakers.
And actively doing that.
And.
And as it relates to this bill to make sure that the.
Infrastructure, even the terminology is used the terminology, we like as smart infrastructure.
Great.
And so we've been working really hard on that and and there are a number of areas that will.
You know as as the context contents of the bill are becoming more clear there are half dozen areas and there that should should result in and business for Luna at some point down the road and in order to do that.
No.
You mentioned working with integration.
Integration partners and and that's that's another element and how we're working this is making sure that we.
We stay in touch with the prime contractors that will actually win the the major parts of this funding and debt we would step in as the.
The supplier to them for the smart sensing technology.
Have you have do you think theres any language around smart sensing that's going to be and the bill already or is it just going to be about smart infrastructure.
Well, yes, so we have actually seen that.
And the roads and bridges side of things on it calls for the Secretary of transportation consider innovative technologies. So that's that's just short of smart sensing, but that that language means you need to go high Tech, which plays to our place to our strength there.
And there is development of leak detection technology for the drinking and wastewater infrastructure, there's modernization and national of our natural gas pipelines, which is also something that is a pretty significant part of our sensing business pipeline monitoring.
And there's a lot of money for.
High speed Internet too.
And and broadband deployment to rural areas, which also.
And specifically calls out optical fiber to be put in.
Ubiquitously, which then we can tap into to make smart smart grid Smart city type solutions, so theres quite a bit and and already but as it goes to the house, there's still time for us to to try to work with our partners to impact to Vic shuttle languages, even even better.
Yeah. That's that's great. When do you when do you think the funds would start flowing and your interaction.
And it gets passed on and the next couple of weeks.
And I couldn't be worse and worse it could be sooner.
I think we'd start seeing the effect of it next year, I don't think and no one's waiting around.
Once this gets once this gets inked and fully approved probably later in the year by the house and whatever form it takes I think.
It'll take a few months and start flowing out to private industry, but we should start seeing at least some impact after that at some point next year. Yeah. We've dedicated a lot of time to make sure. They know who Luna is and pointing out the things that you are putting out there were all over the world, we're already doing and where.
We're already doing it and Theres no reason that we shouldn't be top of that list.
Yeah that sounds good to me and the final question I had was I thought last quarter you guys were talking about and you were really close to some kind of and <unk>.
Electric vehicle battery deal with manufacturer that you couldn't name at that point it sounds like from your earlier comments that that's kind of hiding or we're not going anywhere hasn't happened or can you just talk about that again.
No actually it was yeah, well yesterday yeah.
It's going very well.
But as I mentioned.
Previously there is a process for qualification and work.
Going through the process as I said, we work with.
At least a half dozen club customers and this space to get our technology and to helping them improve the efficiency of the systems and now it's going well.
Okay was that terahertz.
We mentioned specifically the use of our terahertz system, yet so that's 1 of the products and the mix and and sensing where we're using our odyssey fiber optic sensing product as well.
For for temperature mapping with with inside electric batteries.
Okay, Alright, thanks, guys alright.
Alright, Thanks, Mike.
And your next question comes from the line of Mike Meyers private Investor Sir Your line is open.
Hello, Sir.
Hello Hello.
I have a few quick questions here just to check on some of the things that you might be looking into or may not be looking into it you've mentioned and or I haven't heard of them. That's fine just let me know.
But save per length, the trucking industry safety or like the.
And the flatbed trailers are used to a whole lot of things around for infrastructure.
Are there any things and work or you know trailer weight, where they're being bowed Saturday.
And somewhat along and net line since there's a lot more say classic campers out there is there anything that works for seeing if they're overloaded this way or that way or I'm just I'm just.
Asking some ideas here.
Yeah.
And they are all the other all good ideas.
The other 1 is like the water mains and even the sewer lines.
Yeah, and that's better dressed and some of the infrastructure Bill itself Brian.
Brian Nagel.
So yes, we work with we worked with state Dot's on and we're working with several right now on some new traffic flow monitoring concepts.
And so it's a smaller part if you if you look at the markets, where and this 1 is emerging and its still relatively small revenue wise, but yet we're combining.
We're combining several of our sensing products to get to get fiber optics and to monitor traffic flow and <unk>.
Actual counting and way and motion type type solutions and that would go for for all the types of vehicles you mentioned so.
And that's actually and active active part of business development for us.
And the infrastructure Bill should should accelerate some of that.
And on the water.
Side of things as I mentioned some of the contents of the Bill that came out of the Senate did include modernization.
Of our drinking and wastewater infrastructure. So we have leak detection technology that can potentially help with debt.
And then another 1 that I had a question on was what about like farm irrigation and equipment, because they know that stuff blows and the wind and farmers do lose X amount over that product.
Yes, it's an interesting idea we're going to have to look into that 1 we haven't we haven't done that 1 yet.
And then how about anything with the space industry.
And it's happening now for landing barges or anything like that type of item.
Yes, we have a couple of press releases, we've done recently about different technology, we've developed.
And for a couple of different application space based type applications, both on Luna labs, and and and our Lightwave business.
We'll have a we'll have those.
This release is available on or where there are available on our website and we can we can have some and send them over and so you're interested and that alone.
And then how 'bout length, or just a consumer ships yachts larger boats and things like that.
Yeah, we do home monitoring for large boats.
Per weighted wave slap and those sorts of things again.
And not a big application, but we do have we do have sales every year for home monitoring systems for boats.
Now going forward, where I know you said that.
With the stuff going on and not traveling as much do you have any type of.
A small samples that you can send out and do some virtual meetings to help aggregate sales, maybe a little faster.
Yeah. So that's why we've had to and everybody's had to adjust how they they do manage their sales efforts and and yes. We.
We're more in person and and back to kind of traveling to see people. These days, but over the course of the last 15.18 months we've.
And we've had to adjust to doing a lot more zoom type meetings, and sending samples and convincing people that they you know what.
And our need our technology, a little bit of a different way and.
Early success and North America within North America, we're traveling Europe within Europe were traveling it's just we haven't done.
Really any international right now, even though the UK opened up.
Just a little while ago couple of weeks ago, I guess, it but we just haven't.
We've been you've been kind of swamped and haven't been able to schedule that but we do plan on opening that up we just want to be we want to be safe about it we waited this long.
You know, we don't want to jump to that but we are.
To do that use use the virtual ways to kind of sell this and.
And go from there.
Well I was just like I say on the checked on like the farm irrigated and equipment, possibly and.
And he military ships that you might be involved with as well.
Yep, Yeah for sure.
Hum.
Okay, Great I think covered and thank you sir thank.
Thank you I appreciate it thanks Mark.
And our next question comes from the line of Lawrence <unk> from.
On MRI, Sir your line is open.
Alright, Thank you very much and thank you for taking my question.
And.
And also thank you for continuing to grow Luna and growing the revenue I think that's the key point that you brought on today the revenue is.
Drastically up and that's that's.
Great.
You spoke about.
Having strategy meetings.
For near mid and long term can you give us a couple of examples of what you're looking at and the mid to long term.
Sure I mean, I think when we talk about infrastructure you see what's going on out there. We think there's we think there's limitless opportunities.
And using this fiber as the sensor itself.
Infrastructure, and you're talking about perimeter security and.
And bridges and tunnels and dams and I think.
I believe I forget who it was maybe Barry who asked the question about.
And the building down in Miami, and and and you are.
And certainly we are trying to educate everyone. We've had meetings like I said with insurance companies with municipalities with with the developers.
Of.
The cost to make these these buildings and structures smart is is just not overwhelming to the overall cost of and unit, we talked about our partnership with Megan and getting fiber on these planes and being able to to sense.
Heat detection and fire suppression, all those kind of things those are our medium and long term cash.
And of opportunities Ive mentioned before over $100 million company, selling twos and threes. Each of these things in many cases and I think the big gross story with Luna will come and we continue to get more of these orders like we did at Lockheed Martin and 100 plus units when we sell 10 of them 20, 5100, and that's the big thing getting specced in.
I'd say with Airbus for example, getting specced into the <unk> hundred 20, Neo aircraft and being on every plane and then aircraft that Airbus makes that's the long term opportunity getting getting involved and these are infrastructure kind of projects, that's where that's the long term big play here. It's it's.
Really getting out there and having people see what the use of what you can do with something that is nearly weightless thinner than a human hair and non conductive and what we can do with that fiber and the information we can get nothing like that should ever happen and in Florida again, if we can just get the fiber out there and the structure.
And that's about us getting out there and being knowledgeable.
Thank you. Thank you very much just 1 follow up do do you also look at it the mid to long or near.
Future acquisitions is that off and on the strategy.
Oh sure of course I mean.
And I think I said on a previous call or 1 of the meetings, we reached out to after since we reached out to kinetic.
3 years ago, and said we were interested in talking about op to sense and they just weren't interested but we stayed in contact with them. So when it came time when Duff and Phelps. It came time to shop opt a sense. We were certainly on their list to call and say, Hey, I think I know someone that might be interested and they called us.
And said Hey, you called a couple of years ago are you still interested and we were so I think yeah. We're looking at things that are now you know the small kind of add ons like like a new rich technology and and the bigger transactions like Optus sense. I think you can continue to see us look and be acquisitive on.
And on short medium and long term.
No Sir thank you very much.
Thank you.
And your next question comes from the line of Charles Knoles, a private Investor day, Sir Your line is open.
Hey, guys thank them for another buying opportunity here.
Seriously and I think it's great.
Brian you didn't think I'd, let you off.
Hotspot I've saved them.
We have science really getting and.
Formative and Theres a couple of things like that barrier you have that you can spray and.
And for surgery that would be neat if you would.
And exactly how it works and maybe.
What all F. B jeez can do whether you can monitor.
Carbon dioxide carbon monoxide.
And and.
And we'll just want to take this and <unk>.
To say you know I'm on API follower and I've been doing cartwheels, and where what you all have been doing.
And I wish that there and all the API guys that icon that I used to contact I have told them they should contact their state and federal reps and <unk>.
Tell him what all you're doing so I think where the bedroom the best lobbyists and.
And as people contacting their own representatives.
No I agree with that and.
We have you know James Garrett is sitting here with us I think what that might be best to do a follow up I know James would love to have you know.
The principal investigator that wrote that contract and is knee deep in that follow up and get with you I think that would be a good opportunity to kind of talk about that we have a lot of those opportunities that sit in James its group kind of in that R&D had been funded on a say phase 1 phase.
To follow on it's had a couple million dollars of federal funding behind it so.
And I know you have good contacts.
And with some of the low.
<unk> folks there that would be a good contact if youre willing to go.
Kind of have that conversation with us.
Oh yeah.
Lived Luna on that so it's fantastic.
Back when I.
I was talking to Rob Risser, and then stay waves and back and.
Early 2 thousands and they had done this study with Abbott laboratories, where with the pay raise and they can scan a pre packaged pharmaceutical and give them and your per cent accuracy of its contents and that's really why I got invested in a P. I was banned.
Pharmacy, if they could get the pharmacy procured and that would be a huge and so I hope you all I don't know anybody and the pharmacy or I'd be hit them hard, but if that still I was wanting to get Steve on here to get him on the hot seat.
I think that's another.
I was just texting with Steve the other day. So we still are and are in contact he still very interested and Luna and.
So we have some some ideas so you never know.
You know, where we go Steve is.
Always a scientist and and he's not willing to let it go so we bounce from things off him recently so.
Now would be great.
Yes.
That all day, thanks legacy.
Looking great.
Alright, great. Thanks, Scott Thanks, Chuck.
Once again, if you would like to ask a question. Please press <unk>.
And the number 1 key on your Touchtone telephone and age.
A question and that's been answered or you wish to remove yourself from the key please press the pound key.
Okay.
Yes.
I'm showing no further question.
And sorry, we have another 1 here on the follow.
Follow up question from Michael He maker, a private investor.
Go ahead Sir.
Yeah. Thank you Hey, you triggered a thought when you were talking about the infrastructure is there a retrofit opportunity for for the products you sell or does it all have to go on to new construction, new builds and so.
Absolutely yeah, we a lot of the bridges tunnels dams that we do out there there's this.
And this big order that we did down in South America, that's and existing dam, where on that putting fiber on that existing dam and we do a lot on existing bridges and tunnels all the infrastructure, So big Big Big time.
Opportunity on retro and right Brian.
Yeah, it's not and I will do I mean, if it's new week and embedded inside the concrete or inside the composite but yes.
Yes, certainly and opportunity to retro.
I Wonder if the infrastructure Bill is going to talk about retrofitting and new technology, It's and all structures reference hauls and some odd coming now no no no no no. There's there's a lot of the dollars and on road and bridges proportion or will be allocated to improving aging infrastructure.
Big part of this bill.
Okay, great. Thanks.
I'm showing no further question at this time I would now like to turn the conference back to Mr. Scott Graeff. Please go ahead Sir.
Well. Thank you everyone for joining us today I know I spent a lot of time about getting the right team in place for the many opportunities in front of us, but as you've heard me say before culture is critical.
The numbers are always going to be important, but so is making investments to ensure we have the right people platforms and processes in place.
Feel free to reach out to Jeanne Alice and myself anyone with any questions that you have and I look forward to speaking tomorrow with some of you at the Oppenheimer Conference.
Thanks for your time and interest and Luna innovations and now Leah I'll turn it back for you for wrap up.
Thank you Sir and this concludes today's conference call. Thank you all for your participation.
Have a wonderful day you may all disconnect.
And then.
Yes.
And then.
And.
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And.