Hello, and welcome to Innovations. Hello, and welcome to Luna Innovations conference call. Please note that this call is being recorded. I'd now like to hand over to Allison Woody, Senior Director of Administration. Please go ahead. Good morning, and thank you for joining us today. Earlier this morning, we issued two press releases. One announcing our acquisition of Silixa, an independent provider of distributed fiber optic sensing solutions, and a second announcing a strategic investment in Luna by White Hat Capital. We have also posted a related presentation with supplemental information to the investor relations section of our website. If you do not have a copy of the release, releases or the supplemental materials, please check our website at lunainnovations.com. We will also post a replay of this call to our website. Some of our comments and discussions today are based on non-GAAP measures, specifically adjusted EBITDA. These adjusted numbers exclude the effect of certain non-cash expenses and other items. The adjusted results are a supplement to our GAAP financial statements. Luna believes the presentation and exclusion of these items is useful in order to focus on what we deem to be a more reliable indicator of ongoing operating performance. Before we proceed with our presentation today, let me remind you that statements made on this conference call, as well as in our public filings, releases, and websites, which are not historical facts, may be forward-looking statements that involve risk and uncertainty and are subject to changes at any time, including but not limited to, statements about our expectations regarding our projected financial results and outlook, Silixa's expected revenue, the integration of Silixa's employees to Luna, intellectual property and offerings, and the expected benefits of the acquisition, including the financial impact, the ability to expand offerings to our Silixa's, to our and Silixa's customer groups, and the ability to expand into additional high-growth markets. 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 our SEC filings, which can be found on the SEC website and our website. We disclaim any obligation to update any such factors or to announce publicly the results of any revision to any of the forward-looking statements to reflect future events or developments, except as required by law. After our prepared remarks, Scott Graeff, our President and Chief Executive Officer, George Gomez-Quintero, our Chief Financial Officer, and Brian Soller, our Chief Technology Officer, will be available to take your questions. At this time, I'd like to turn the call over to Scott. Good morning, everyone, and thank you for joining us on such short notice to learn about our acquisition of Silixa and the concurrent strategic investment in Luna by White Hat Capital. We're excited to announce the culmination of nearly a year of work and the acquisition of Silixa for upfront cash of $21.5 million. Additional cash consideration of $16.5 million is based on an earn-out against financial metrics through year-end 2024. Concurrently, we are announcing an investment of $50 million in convertible preferred equity by White Hat Capital. Proceeds will be used to fund the Silixa acquisition, pay off our approximately $17 million term loan with PNC Bank, and for other growth initiatives. Before we dive into details, I want to extend a very warm welcome to the Silixa team. We at Luna are pleased to have you join us. Each of you bring a unique experience and expertise that will help propel us forward, and we're excited about the success that together we'll be able to achieve. I want to commend Silixa founders, Mahmoud and Tom, on the technology they have built. I am glad that these two gentlemen will be staying with the combined company and know that they will add tremendous value. Glynn Williams, who has served as CEO at Silixa, led the company to tremendous success and will remain as an advisor through year-end 2024. I'm grateful to Glynn for the company he is handing over to us. Finally, I want to say a special thank you to Alison Goligher, Chair of Silixa, who has been absolutely instrumental in helping all parties get to our announcement today. As with any large transaction, there are many people involved in making it happen. My gratitude extends to everyone for all the hard work, especially so close to the holidays and year-end. Now, let me turn to some of the details of the acquisition. As many of you know, it was during COVID that Luna began to establish a strong global presence, starting with the acquisition of OptaSense. We followed that a year and a half later with the acquisition of LIOS, expanding that international footprint. Today, we are announcing the acquisition of Silixa, a global company based in the U.K.. This move gives Luna even greater international scale. But the more exciting feature of this transaction is the strategic fit within the vision of what Luna can be. It brings incremental capabilities, talent, and a significant focus on solutions that address issues such as climate change, natural hazards, and an increasing population. Adding Silixa elevates the Luna portfolio and specifically our sensing vertical. With its distributed fiber optic sensing capabilities, including acoustics or DAS, temperature or DTS, and strain or DSS. Beyond that, the combination will extend Luna's reach into new areas such as Carbon Capture and Storage, a rapidly growing market, where distributed fiber sensing is a critical part of ensuring the safety and longevity of advanced systems that are being deployed to keep carbon from being released into the atmosphere. The combination also provides exposure to incremental growth areas, such as sectors of the oil and gas exploration market, the defense market, and it advances our efforts in the geotechnical monitoring market. The net effect is a significant expansion of Luna's served market within the large and growing fiber sensing arena. Silixa's capabilities are complementary to Luna's, and we anticipate that the expansion of our served market will be accompanied by revenue synergies with minimal cannibalization as we cross and upsell our new combined portfolio. Importantly, this acquisition will advance our solutions-based offerings with highly integrated solutions with potential for building recurring revenue streams. As an example, Silixa's Edge system helps customers with data acquisition, management, and processing in an integrated cloud-enabled platform, which will accelerate Luna's efforts towards driving to higher levels of recurring revenue. As I mentioned a few moments ago, the acquisition offers us exposure to additional end markets, but it also provides us with incremental capability to serve our existing industries, such as our efforts to grow mining and energy. With over 200 patents in the Silixa portfolio, Luna is nearing a robust 1,000 patent portfolio, putting Luna in an ever stronger position to expand our market share. On the human capital side, the addition of Silixa adds terrific talent in sales, marketing, engineering, and R&D. This will help us fill important positions in our EMEA organizational structure as we continue to expand our global footprint. Overall, the business fits well within the organization we've built since the acquisitions of OptaSense and LIOS. You might remember that those two acquisitions were the result of carve-outs from significantly larger companies. By comparison, Silixa is a fully operational and standalone, and as a result, we do believe that the integration of this acquisition will be less complex than our previous two. In addition, the Luna team has spent significant time during the past year meeting in person with the Silixa team and doing due diligence. White Hat Capital has also visited many of the Silixa office sites and has met with management and done robust due diligence along with the Luna team. All of this gives us confidence that we understand this business, its value to customers, the strength of the technology, and the future potential. We at Luna are ready to quickly leverage the potential represented by this transaction. As you all know, we have bolstered our leadership team with seasoned professionals, ensuring we have the right people in the right roles to help guide integration and strategic growth. We've done all this with a constant focus on creating a world-class team and building out the capabilities that will provide the greatest potential for the growth of our pure play fiber optics company. Now, let me turn to the investment and partnership with White Hat Capital. You likely read in the morning's press release that the acquisition is being funded by a strategic investment in our company being made by White Hat Capital Partners. The investment comes with a board seat that will be assumed by David Chanley, a managing partner of White Hat. I've had the privilege of spending a good amount of time with David and his colleagues for nearly two years, and have had the opportunity to work closely with David, see how he thinks, and we mutually benefited from our joint perspectives on the Silixa acquisition. For those of you unfamiliar with White Hat, they've been around since 2016 and focus on concentrated, value-oriented investments in publicly traded technology companies. As we mentioned in the press release about this investment, White Hat knows our space very well and will bring an additive viewpoint to our deliberations. I welcome David to our company and know he will make a great addition to our board. A little bit more about the details of the investment itself. Luna is issuing 52,500 initial shares in a new series of convertible preferred stock to White Hat Capital. Each share has an initial liquidation preference of $1,000 per share, convertible into shares of Luna common stock, beginning one year from issuance at a conversion price of $6.70 per share, which was a 10% premium to our 30-day volume weighted average price. Until the end of 2026, White Hat will have the right to purchase up to an additional 12.5 million of Series B convertible preferred stock with the same terms. The preferred stock will accrue quarterly dividends payable at Luna's option at either 8.5% annual rate if paid in cash, or a 10% annual rate if paid in kind. White Hat Capital has agreed to a 36-month standstill, and the investment not only funds the Silixa acquisition, but is also intended to accelerate Luna's business expansion and operational initiatives, while also helping to improve our balance sheet flexibility. As I mentioned earlier, some of the proceeds are also being used to repay our term loan with PNC. As I mentioned in today's press release, we are incredibly appreciative of White Hat's belief and investment in our vision and thrilled to have them as a new partner. I believe that their investment is a vote of confidence in both the acquisition of Silixa and in the Luna strategy. I do want to highlight that the transaction is expected to be accretive to non-GAAP earnings within the first year. Obviously, with the transaction closing so close to the end of our fiscal year, please note that any significant financial contribution from the acquisition will be realized in fiscal year 2024 and beyond. We are not ready to share our 2024 outlook, but plan to do so as we would normally on our Q4 and year-end call in early March. Silixa will be included in that outlook. I hope today's call has given you some insight into why we fully believe that the acquisition will produce outstanding outcomes for Luna. Our investors and shareholders can expect profitable growth and increased value. Our customers can expect a broadened portfolio, an intense focus on innovation, and bold solutions that will help solve even their most pressing business challenges. And our employees will benefit from extended talent and career opportunities that come with a combination of our two terrific companies. I speak for our entire executive team and on behalf of our board of directors when I say that we are incredibly excited about Luna's future and believe it to be even brighter with the addition of the Silixa team. Before we open the floor for questions, I want to say how extremely proud I am of the passion and energy everyone involved in this transaction has demonstrated. This is an incredibly exciting development, made possible by their hard work and belief in a shared vision. Their collaboration, dedication, incredible talent, and sharp insights are certain to keep us on the path to expanding our leading capabilities in fiber optics and securing a position as a global powerhouse. This is a great way to end the year, and we at Luna wish everyone a happy holiday and Happy New Year. With that, operator, let's open the call for questions. Thank you, ladies and gentlemen. We are now open for the question-and-answer session. If you have any questions, please press star and number one on your telephone keypad. Our first question comes from Alex Henderson from Needham. Your line is now open. Great, thank you so much. First off, this looks like a great acquisition. So congratulations to you and your team. I was hoping you could give us some sense of how you think this company meshes with your margin structure. You know, is the gross margin here comparable to, above, below? And do you expect to be able to get some leverage to that gross margin as you move forward? And how do we split the between gross margin and, you know, what's the increment to quarterly sales and marketing R&D? Can you give us any granularity around the margin structure? Yeah, you know, Alex, you know, they're in the project base, like a lot of our business, you know, at, you know, we talk about the sensing in EMEA that we acquired through LIOS and OptaSense and the DAS and the DTS. So their margins are very similar to that. You know, we range, depending on the project, depending on the product, somewhere in that 50%-60% range. I think they're certainly in that range, kind of in the low to middle of that range, you know, kind of that 50%, 55%. But we see it creep up a little bit higher on some specific products. So they're in line with what we're doing, you know, currently in the project-based business. And then any sense of the mix between sales and marketing and R&D, just maybe percentage of OpEx that goes into the in between those two? Yeah, not at this time. We can get back to you on that, but I mean, right now, I don't have at my fingertips that, the breakout of what that is, Alex. One more question, if I could. Yeah. You're saying it's accretive. I assume that there's some upfront costs, you know, to integrate and then it that it the margin benefits improve over the course of the year. So is this dilutive to, say, the March and June quarter, and accretive to the back half and net accretive or? Right. We talk about it being accretive to the non-GAAP, Alex. You know, I think, you know, any one time we would back out. So we believe it's accretive to the non-GAAP earnings, is what we're representing. Yeah. But that's what I was saying. But is it dilutive in the first half of the year and accretive in the back half, or is it, you know, going to be a quarter- Oh, overall? You know, just as a quarterly progression of the accretion. ... Yeah, I mean, yeah, I think you're right. I see what you're saying. I didn't fully understand the question at first. Yeah, I think, like we said, annually, we think it will be, but yeah, it'll step into that. So I think you're probably looking for, you know, it's tighter in the first half of the year, and then it will pick up in the second to catch up to that accretiveness. Great. Thanks. Thanks, Alex. Our next question comes from Ruben Roy from Stifel. Your line is now open. Thank you, and congrats, team, on the acquisition. Scott, I had maybe a first question, higher level here. Just kind of thinking through the strategy you laid out at your Investor Day back in May and, you know, sort of your long-term targets, et cetera. You know, question number one: do you think that the Silixa acquisition will be incremental to your longer term growth? And I guess, as part of that, just thinking through, you know, adding, you know, scale on the sensing side, does that change the way you're thinking at all about your ComTest business? No, I mean, I think we consider the ComTest business an important piece of what we're doing. It just becomes a smaller piece of the pie. You know, what you heard at Investor Day when you heard me talk about that was the importance of the kind of recurring revenue. We believe that in order to achieve what we're laying out in that five-year plan, Ruben, we need the servicing side of it. We need the ongoing monitoring side, and you know, nearly half of Silixa's revenue comes in the recurring fashion. It comes in recurring revenue. So I think that's an important piece of what was very attractive to us in looking at that. It is... We've learned over time, it is one thing to say that you want to be the monitor of that asset, and another thing to be executing on that. You know, involving a 24/7 team that is monitoring that. Silixa has made that investment and made those steps forward. You know, that go-forward plan was always part of their strategy, and they're very far along on that. And that was very attractive to us to get that kickstart into that recurring revenue. That's really helpful, Scott. I guess a follow-up would be, you know, it looks like from the slides you put out, that the end markets are very complementary and Silixa is playing in markets that you're not- Yeah, you know, we- Addressing currently. Well, I guess the question, though, would be, you know, is that recurring revenue applicable to your markets, you know, from day one? Can you, you know, kind of, you said you used the term cross-sell on your prepared remarks. Just wondering if, you know, kind of if that's gonna take time to kind of reach over to some of your existing customers and markets, or if this is something that you can, you know, get going pretty quickly? Yeah. You know, I'll let Brian, he dove into that. You know, we're very excited about about the carbon capture, you know, markets that they're in. That is not something that our current technology was able to penetrate that. So that was very exciting, and we do look at parlaying that software into our products to get more of that servicing ongoing revenue. I'll let Brian talk a little bit more if you- Yeah, we think there are markets that are a little more primed for the model. Scott mentioned carbon capture, which is where that it's sort of already up and running. But this will help us with our tooling on the product and the solution side. So it, it'll advance our efforts, so that you know, we can continue on the, on the market side, pushing the markets to adopt the model. And it is applicable across any application where you know, the equipment is installed permanently, which is most of our applications now. When you look at energy, when you look at infrastructure, pipelines, et cetera, that's all permanent installation, and we believe that model should apply in all of those. Okay. I just have one final one. Thank you, Brian. Scott, just, you know, you're probably gonna want to wait till March for this, but I'll ask anyway, if you can give us a sneak peek on, you know, how, what the earn outs might entail. Are they revenue-based, project-based, margin-based, or all of the above? Any, you know, kind of early detail on that would be helpful. Yeah, I mean, you know, look, we think, you know, revenue is important. We think, but we think you know, gross margin's important. So gross profit is important, revenue is important, and I think you will see both of those, you know, factoring into that earn-out. You know, they certainly can control revenue, and we can control revenue, and we can control the gross profit. What I want to be careful of, and you have to be careful of all earn-outs, is what gets done below that. You know, and so we chose to keep it at, you know, at those two important metrics, you know, top line and that gross profit line. You'll see those as the drivers to that earn-out. Excellent. Thanks a lot for all the details and congrats again. Yep, thanks, Ruben. If you'd like to ask any questions, please press star and number one on your telephone keypad. Our next question comes from Alex Henderson from Needham. Your line is now open. Yeah, great. Thanks. So you guys have a fair amount of seasonality to your business. I get it that 50% of your business is recurring, but would it be reasonable to assume that the seasonality that you see is comparable to the seasonality that they see? So when we're modeling in the incremental revenue, it would follow the same pattern? ... I think we see similar seasonality, Alex, in what they're doing versus us. I mean, people are just slower to, you know, to kind of reach out and budgets are getting set in Q1 and doing things like that. So I think you'll see somewhat seasonality, but we certainly do hope to flatten out what we have seen at Luna. You know, time will tell, but you know, our second half is so heavily loaded. You know, we're 42%, whatever it ends up being, 42% - 44% in the first half and then the difference there in the second half. So I think it'll be somewhat similar, but we do hope that the addition of Silixa will help flatten some of that out. Okay. Upfront, for the first year of modeling, we should assume the same seasonal pattern? Yeah, and I think, you know, Alex, we'll be able to give a little bit more color on that when we announce the 2024 guidance. Right now, you know, we have a lot of work to do to sit down and roll them into our very bottoms up detailed budget process and things like that. So that's why I chose not to give guidance for 2024 right now. I believe there's work to be done to sit down with them in early January to go through that. So as soon as we can, we can give that guidance, we will certainly come out with that and help you guys in layering in to the 2024, you know, kind of numbers. We just don't. We aren't prepared today to talk about that right now. Yeah, but we got to model it. Thanks so much. Yeah. We have our next question from David Kang from B. Riley. Your line is now open. Thank you. Good morning, and my congrats as well. First, can you give us revenue by geography and also who their key customers are and their concentration, please? Yeah. I don't think we're gonna be prepared to get into the revenue by geography, but it's not too far off of, in terms of the detail anyway, Dave, but it's not far off of what you see kind of in the Luna historical. It's kind of 40%-50% North America, and then the rest split between, well, you know, maybe 30% in EMEA, 20% APAC, kind of a breakout. And then bigger customers, you know, a little less than half their business is really in the oil and gas space, and it's really all the big names in oil and gas exploration in that space. And then, you know, the rest of the business breaks down into about 40% environmental and infrastructure monitoring. And that's where carbon capture lies. And so, that's a lot of larger energy companies as well. And then about 10%, defense, North American defense, which is actually an area that we believe we can see some pretty early synergies by having a, you know, North American-based HQ, and drive some top-line growth in- Yeah, I mean, I think, you know, seeing, you know, a little more than half, I guess, like Brian said, Dave, in oil and gas, you know, imagine where a lot of that lies geographically with oil and gas. And then the other half, you know, the carbon capture, like Brian mentioned, defense, mining, environmental monitoring, things like that, making up the other 50% or so. You know, it, it's got a lot of European presence. I mean, we do have. They do have, like we have, you know, in the EMEA area, in doing a lot of these projects. You know, Europe has just been much more of a thought leader in monitoring the assets that are out there. You know, EMEA and Europe is mandating some of those, and we're -- so we're seeing a lot more activity, which is why, you know, these additions that we've done over the last three years with OptaSense, LIOS, and now Silixa, end up being based, you know, in Europe, because of that. They always have a presence, like the carbon capture initiative is based here, in Montana for Silixa. But the, you know, the headquarters and bulk of the folks lie in Europe, David. Got it. And just wondering if you can provide any more color, as far as you said it will be accretive. Just wondering if you can provide a little bit more color. Are we talking about maybe a couple percent or maybe more meaningful? Yeah. Yeah, I mean, I think till we get our hands around this... Again, that, that's really why I'm talking about it. And I know, you know, I get Alex's point, but, but, you know, until we get rolled up into a detailed budget process, bottoms up. But it, it's, it's not, you know, it is, it was important for us to make sure, with, with some modest synergies, that, that we got to accretiveness on an adjusted non-GAAP, you know, kind of earnings basis within a year. That was important to us. That's, you've heard me say that before. You know, as we, as we look at, at these, you know, inorganic growth areas. And so that, that was something that we... But I wouldn't look at it being tremendously accretive, but we make sure that it is. Got it. And my last question is, you didn't mention anything about, fourth quarter. Are you reaffirming or, or no comment? Yeah, I don't think there's any, you know, I don't think there's any reason, you know, to, you know, what we said still stands true. There's, you know, you know the business, David. It's, you know, there's a lot of book and turn that needs to go on and things like that at quarter end, but I don't have any reason to change anything, or give you any insight into anything right now as it relates to Q, you know, Q4. Got it. Thank you. Yep. Thank you, Dave. Our next question comes from Charles Knowles, shareholder. Your line is now open. Well, I like the timing of this. Merry Christmas to you, too. I was curious to know how many people are in this company? Hey, Charles, nice to talk to you. A little over 100 people, about 80 of those in the U.K.. And then, there's, they're split between Texas facility, Montana facility, as Scott mentioned, for carbon capture, handful of people in Canada and in the Middle East as well. Okay, great. Sounds fun. Thanks. All right. Well, happy holidays, Charles. Yeah. Yep. Thanks, Charles. If you'd like to ask a question, please press star and number one on your telephone keypad. That's star and number one on your telephone keypad. Looks like we don't have any incoming questions as of the moment. We'd now like to turn back the call over to the President and CEO, Scott Graeff. Thank you. All right. Well, thanks, everyone, for joining us today. Again, you know, have a happy holiday, and it wasn't perfect timing, but it was what it was. We weren't gonna not do our due diligence, and this is kind of how the timing shook out. So, we appreciate all the efforts done by our folks and you guys taking the time to join this call. So happy holidays, and with that operator, we'll end the call today. Thank you so much. This concludes the meeting for today. You may now all disconnect. Have a happy holidays, everyone.