ISSC Innovative Solutions and Support Inc

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

For the second quarter of fiscal 2024, IS&S reported net sales of $10.7 million, up 46% from $7.3 million in the second quarter a year ago. The Company reported net income of $1.2 million, or $0.07 per share, compared to net income of $1.3 million, or $0.07 per share, in the second quarter of fiscal 2023.

Sales and earnings in the second 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. Costs for the quarter included approximately $500,000 of amortization of customer relationship and one-time non-recurring items related to the Honeywell acquisition and other corporate matters. Excluding the one-time non-recurring costs of the Honeywell acquisition, profitability also increased from the year ago comparative quarter.

Shahram Askarpour, Chief Executive Officer of IS&S, said, “The momentum of our business continued as we delivered double-digit sales growth. The second-quarter results were consistent with our expectations and driven by our focused execution. I also want to welcome Jeff DiGiovanni, who joined us last month as CFO and will be a key contributor to our long-term planning and strategy. This past quarter featured a continuation of our plans to grow both organically, through new product development and expansion into related markets, as well as via acquisitions.”

Over the first half of fiscal 2024, the Company generated $4.4 million of positive cash flow despite all one-time expenses associated with the acquisition and integration.

New orders in the second quarter of fiscal 2024 were approximately $6.6 million, and backlog as of March 31, 2024, was $10.4 million. The backlog includes only purchase orders in hand and excludes orders from our OEM customers under long-term programs, such as 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 several years and anticipates they will continue to generate future sales. Further, 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 Monday, May 13, 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; expectations that our new CFO will be a key contributor to our long-term planning and strategy; our plans to grow organically through new product development and related market expansion, as well as via acquisitions; 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. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

 

 

 

 

 

 

March 31,

 

September 30,

 

 

2024

 

 

2023

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

574,079

 

 

$

3,097,193

 

Accounts receivable

 

 

6,061,185

 

 

 

9,743,714

 

Contract assets

 

 

1,230,607

 

 

 

487,139

 

Inventories

 

 

9,120,870

 

 

 

6,139,713

 

Prepaid inventory

 

 

6,775,822

 

 

 

12,069,114

 

Prepaid expenses and other current assets

 

 

711,772

 

 

 

1,073,012

 

Assets held for sale

 

 

—

 

 

 

2,063,818

 

 

 

 

 

 

 

 

Total current assets

 

 

24,474,335

 

 

 

34,673,703

 

 

 

 

 

 

 

 

Goodwill

 

 

3,557,886

 

 

 

3,557,886

 

Intangible assets, net

 

 

15,648,321

 

 

 

16,185,321

 

Property and equipment, net

 

 

12,450,425

 

 

 

7,892,427

 

Deferred income taxes

 

 

1,173,227

 

 

 

456,392

 

Other assets

 

 

319,704

 

 

 

191,722

 

 

 

 

 

 

 

 

Total assets

 

$

57,623,898

 

 

$

62,957,451

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Current portion of long-term debt

 

$

10,642,885

 

 

$

2,000,000

 

Accounts payable

 

 

2,647,123

 

 

 

1,337,275

 

Accrued expenses

 

 

2,415,095

 

 

 

2,918,325

 

Contract liability

 

 

96,650

 

 

 

143,359

 

 

 

 

 

 

 

 

Total current liabilities

 

 

15,801,753

 

 

 

6,398,959

 

 

 

 

 

 

 

 

Long-term debt

 

 

—

 

 

 

17,500,000

 

Other liabilities

 

 

444,440

 

 

 

421,508

 

 

 

 

 

 

 

 

Total liabilities

 

 

16,246,193

 

 

 

24,320,467

 

 

 

 

 

 

 

 

Commitments and contingencies (See Note 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

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 March 31, 2024 and September 30, 2023

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

Common stock, $.001 par value: 75,000,000 shares authorized, 19,556,434 and 19,543,441 issued at March 31, 2024 and September 30, 2023, respectively

 

 

19,556

 

 

 

19,543

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

54,792,307

 

 

 

54,317,265

 

Retained earnings

 

 

7,934,379

 

 

 

5,668,713

 

Treasury stock, at cost, 2,096,451 shares at March 31, 2024 and at September 30, 2023

 

 

(21,368,537

)

 

 

(21,368,537

)

 

 

 

 

 

 

 

Total shareholders’ equity

 

 

41,377,705

 

 

 

38,636,984

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

57,623,898

 

 

$

62,957,451

 

INNOVATIVE SOLUTIONS AND SUPPORT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Six Months Ended March 31,

 

 

 

2024

 

 

2023

 

2024

 

 

2023

 

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

4,895,589

 

 

$

5,945,151

 

$

9,319,697

 

 

$

11,035,358

 

Customer service

 

 

5,098,222

 

 

 

1,395,303

 

 

9,325,469

 

 

 

2,454,452

 

Engineering development contracts

 

 

745,705

 

 

 

—

 

 

1,402,413

 

 

 

366,899

 

Total net sales

 

 

10,739,516

 

 

 

7,340,454

 

 

20,047,579

 

 

 

13,856,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

2,347,695

 

 

 

2,202,750

 

 

4,129,040

 

 

 

4,618,694

 

Customer service

 

 

2,462,260

 

 

 

397,553

 

 

4,189,221

 

 

 

716,655

 

Engineering development contracts

 

 

347,199

 

 

 

—

 

 

623,794

 

 

 

57,406

 

Total cost of sales

 

 

5,157,154

 

 

 

2,600,303

 

 

8,942,055

 

 

 

5,392,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

5,582,362

 

 

 

4,740,151

 

 

11,105,524

 

 

 

8,463,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,031,119

 

 

 

866,198

 

 

1,932,263

 

 

 

1,536,643

 

Selling, general and administrative

 

 

2,908,193

 

 

 

2,446,635

 

 

5,915,012

 

 

 

4,708,498

 

Total operating expenses

 

 

3,939,312

 

 

 

3,312,833

 

 

7,847,275

 

 

 

6,245,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,643,050

 

 

 

1,427,318

 

 

3,258,249

 

 

 

2,218,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(171,470

)

 

 

—

 

 

(531,483

)

 

 

—

 

Interest income

 

 

36,200

 

 

 

130,951

 

 

115,679

 

 

 

246,843

 

Other income

 

 

26,472

 

 

 

23,258

 

 

44,171

 

 

 

41,455

 

Income before income taxes

 

 

1,534,252

 

 

 

1,581,527

 

 

2,886,616

 

 

 

2,507,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

325,936

 

 

 

310,424

 

 

620,950

 

 

 

537,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,208,316

 

 

$

1,271,103

 

$

2,265,666

 

 

$

1,969,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

0.07

 

$

0.13

 

 

$

0.11

 

Diluted

 

$

0.07

 

 

$

0.07

 

$

0.13

 

 

$

0.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,456,120

 

 

 

17,352,340

 

 

17,453,741

 

 

 

17,334,553

 

Diluted

 

 

17,487,527

 

 

 

17,354,030

 

 

17,481,217

 

 

 

17,340,104

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513484660/en/

610-646-9800 X550