ISSC Innovative Solutions and Support Inc

Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the first quarter of fiscal 2024, which ended December 31, 2023.

For the first quarter of fiscal 2024, IS&S reported net sales of $9.3 million, up 43% from $6.5 million in the first quarter a year ago. The Company reported net income of $1,057,350, or $0.06 per share, increases of 51% and 50%, respectively, compared to $698,651, or $0.04 per share, in the first quarter of fiscal 2023.

Gross profit in the first quarter of 2024 was $5.5 million, or 59.3% of sales, compared to $3.7 million, or 57.1% of sales in the first quarter of 2023.

Sales and earnings in the first quarter of 2024 continued to benefit from the product lines acquired from Honeywell International, Inc. (“Honeywell”) pursuant to an exclusive license and asset acquisition that closed in the third quarter of 2023.

Shahram Askarpour, Chief Executive Officer of IS&S, said, “We are pleased to report another quarter of year-over-year growth in both revenues and earnings. The integration of the product lines acquired from Honeywell is progressing and ongoing. These products complement our existing portfolio of products, offer recurring revenues, and introduce IS&S to a new market segment. As we continue to generate gross margins approaching 60% and strong cash flow, our debt position was reduced to $10.6 million as of December 31, 2023, or approximately $8.9 million less than just three months ago. Revenues were up 43% in the quarter, keeping us on pace with our goal to grow annualized revenues by approximately 40% compared to our pre-acquisition revenue levels upon the completion of the integration.”

For the first quarter of fiscal 2024, the Company generated $4.2 million of cash flow from operations.

New orders in the first quarter of fiscal 2024 were approximately $10.4 million. Backlog as of December 31, 2023, was $14.6 million. Only purchase orders in hand are included in our sales backlog, which primarily consists of orders from our OEM customers that have long-term programs—Pilatus PC-24, Textron King Air, Boeing T-7 Red Hawk and the Boeing KC-46A. IS&S expects these programs to remain in production for approximately a decade and anticipates that they will continue to generate future sales. Due to their nature, the products licensed from Honeywell do not typically enter backlog.

Conference Call

The Company will be hosting a conference call on Thursday, February 15, 2024 at 10:00 AM ET to discuss these results and the Company’s business outlook and product development. Please use the following dial- in number to register your name and Company affiliation for the conference call: 844-739-3798 and ask to join the Innovative Solutions & Support call. The call will also be carried live on the Investor Relations page of the Company web site at www.innovative-ss.com.

About Innovative Solutions & Support, Inc.

Headquartered in Exton, Pa., Innovative Solutions & Support, Inc. (www.innovative-ss.com) is a systems integrator that designs and manufactures flight guidance and cockpit display systems for Original Equipment Manufacturers (OEMs) and retrofit applications. The Company supplies integrated Flight Management Systems (FMS), Auto-Throttle Systems and advanced GPS receivers for precision low carbon footprint navigation.

FORWARD LOOKING STATEMENT DISCLAIMER

In addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In this press release, the words “anticipates,” “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “forecasts,” “expects,” “plans,” “could,” “should,” “would,” “is likely”, “projected”, “might”, “potential”, “preliminary”, “provisionally” and similar expressions, as they relate to the business or to its management, are intended to identify forward-looking statements, but they are not exclusive means of identifying them. All forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, statements about: future revenue; financial performance and profitability; future business opportunities; the integration of the Honeywell product lines, including statements regarding the ongoing integration, how the product lines complement our existing portfolio of products, offer recurring revenues and introduce us to a new market segment, and expectations regarding growth of annualized revenues upon completion of such integration; and the timing of our long-term programs remaining in production and continuing to generate future sales. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions, risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the Company’s ability to efficiently integrate acquired and licensed product lines, including the Honeywell product lines, into its operations; a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the economic and business environments in which the Company operates. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and subsequent reports filed with the Securities and Exchange Commission. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

  Innovative Solutions and Support, Inc. Consolidated Balance Sheets (unaudited)   December 31, September 30,

 

2023

 

 

2023

 

ASSETS Current assets Cash and cash equivalents

$

467,334

 

$

3,097,193

 

Accounts receivable

 

5,583,593

 

 

9,743,714

 

Contract asset

 

647,644

 

 

487,139

 

Inventories

 

7,799,935

 

 

6,139,713

 

Prepaid inventory

 

11,509,067

 

 

12,069,114

 

Prepaid expenses and other current assets

 

919,639

 

 

1,073,012

 

Asset held for sale

 

-

 

 

2,063,818

 

  Total current assets

 

26,927,212

 

 

34,673,703

 

  Goodwill

 

3,557,886

 

 

3,557,886

 

Intangible assets, net

 

15,916,821

 

 

16,185,321

 

Property and equipment, net

 

7,931,009

 

 

7,892,427

 

Deferred income taxes

 

1,141,048

 

 

456,392

 

Other assets

 

224,221

 

 

191,722

 

  Total assets

$

55,698,197

 

$

62,957,451

 

  LIABILITIES AND SHAREHOLDERS' EQUITY   Current liabilities Current portion of long-term debt

$

10,611,514

 

$

2,000,000

 

Accounts payable

 

1,545,799

 

 

1,337,275

 

Accrued expenses

 

2,984,947

 

 

2,918,325

 

Contract liability

 

228,306

 

 

143,359

 

  Total current liabilities

 

15,370,566

 

 

6,398,959

 

  Long-term debt

 

-

 

 

17,500,000

 

Other liabilities

 

427,581

 

 

421,508

 

  Total liabilities

 

15,798,147

 

 

24,320,467

 

  Commitments and contingencies

 

-

 

 

-

 

  Shareholders' equity   Preferred stock, 10,000,000 shares authorized, $.001 par value, of which 200,000 shares are authorized as Class A Convertible stock. No shares issued and outstanding at December 31, 2023 and September 30, 2023

 

-

 

 

-

 

  Common stock, $.001 par value: 75,000,000 shares authorized, 19,550,184 and 19,543,441 issued at December 31, 2023 and September 30, 2023, respectively

 

19,549

 

 

19,543

 

  Additional paid-in capital

 

54,522,975

 

 

54,317,265

 

Retained earnings

 

6,726,063

 

 

5,668,713

 

Treasury stock, at cost, 2,096,451 shares at December 31, 2023 and at September 30, 2023

 

(21,368,537

)

 

(21,368,537

)

  Total shareholders' equity

 

39,900,050

 

 

38,636,984

 

  Total liabilities and shareholders' equity

$

55,698,197

 

$

62,957,451

 

  Innovative Solutions and Support, Inc. Consolidated Statements of Operations (unaudited) Three months ended December 31,

 

2023

 

2022

Net Sales: Product

$

4,424,108

 

$

5,088,208

Customer service

 

4,227,247

 

 

1,061,149

Engineering development contracts

 

656,708

 

 

366,899

 

9,308,063

 

 

6,516,256

Cost of sales: Product

 

1,781,345

 

 

2,415,944

Customer service

 

1,726,961

 

 

319,102

Engineering development contracts

 

276,595

 

 

57,406

Total cost of sales

 

3,784,901

 

 

2,792,452

  Gross Profit

 

5,523,162

 

 

3,723,804

  Operating expenses: Research and development

 

901,144

 

 

670,445

Selling, general and administrative

 

3,006,819

 

 

2,261,863

Total operating expenses

 

3,907,963

 

 

2,932,308

  Operating income

 

1,615,199

 

 

791,496

  Interest (expense)

 

(360,013

)

 

-

Interest income

 

79,479

 

 

115,892

Other income

 

17,699

 

 

18,196

  Income before income taxes

 

1,352,364

 

 

925,584

  Income tax expense

 

295,014

 

 

226,933

  Net income

$

1,057,350

 

$

698,651

  Net income per common share: Basic

$

0.06

 

$

0.04

Diluted

$

0.06

 

$

0.04

  Weighted average shares outstanding: Basic

 

17,451,362

 

 

17,316,766

Diluted

 

17,474,906

 

 

17,326,177

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214548805/en/

Rell Winand – CFO 610-646-9800 X550