Luna Innovations Incorporated (NASDAQ:LUNA) Q4 2022 Earnings Call Transcript

Paul Essi: Okay. And then the cross-selling, how is that handled? Is there someone that’s person? Or do they just trade back and forth?

Scott Graeff: Yes. That announcement of the Dominion Energy deal is important from a couple ways. That was something that was in the pipeline of Lios and we delivered that. But we brought with that and pitched Dominion why they should also want the strain sensing from OptaSense that we know with the acoustics. So that is an example of bringing together both the Lios and OptaSense capabilities into a project. So that is some cross-selling.

Brian Soller: Yes. And all of our sales leaders in that side of the business carry the full bag and really cross-sell to the DAS and DTS products and are incentivized to do so. So it’s not like we have two teams that are incentivized to cross-sell. It’s really more like we have one team selling everything.

Paul Essi: Okay. And then the monitoring, is that something that everyone is vertically integrated as well? And also along those lines, if you’ve gone back into the install base, what’s been the reception in trying to get some of the monitoring business?

Brian Soller: Yes. The reception has been very, very good. In fact, we just finished the commissioning on one of the world’s longest oil and gas pipelines in Turkey. And once we were able to complete that, I think we have 50-plus systems on that pipeline. We went back to that installation to talk about service installations over the course of the next three, four, five years and very highly regarded the Dominion power news that we discussed in our press release and on the call here today, same story in terms of really strong reception for that kind of ongoing service portion of the monitoring contract.

Paul Essi: Okay. One last question. The infrastructure bill, not the broadband, which has its own issues, but the brick-and-mortar, the dams, the traffic patterns. What’s your strategy here and what would be the timing of these funds being released over the next year or two and what type of impact may that have on you? And then also, again, a long question, but how does the monitoring tie-in with that program?

Brian Soller: Most of that is going to include our monitoring capabilities. In fact, I’d say, when I say most, it’s probably more accurate to say all or nearly all. Our strategy there is to follow the dollars from the federal agencies into the state agencies, DoTs et cetera. And then also, make sure we’re keeping close track of the feed consultants and the prime contractors that will €“ the contracts will be led to. We have our business development team paying very, very close attention to that as you might imagine. To make sure that, we’re aware of any and all RFPs that Luna could respond to, whether it be infrastructure, roadway, et cetera. And timing wise, that’s €“ it’s rolling out a little slower maybe than we would’ve expected.

We were thinking early part of this year, mid part of this year, we’d start to see a little bit more impact on that. But frankly, I’d have to say that the expectation has probably moved out towards the later part of this year into next year before you’d start seeing a material impact. But it is coming, the projects will be let and they will start and Luna will be participating in those.

Scott Graeff: Yes. Paul, it’s truly unbelievable how these guys in many ways are difficult in rolling things out. I guess, you expect it with the federal government maybe. But we stand there, we have teams in front of them, they certainly know that we have capabilities, they’ve talked to us about it. They just don’t have the money yet. And I don’t fully appreciate or understand the delay, but we certainly stand ready with it, and monitoring is a huge piece of that. We really believe that that will play an impactful role in us going forward.