Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the fourth quarter and full fiscal year 2022 ended September 30, 2022.
For the fourth quarter of fiscal 2022, IS&S reported net sales of $7.3 million, up 5.7% as compared to $6.9 million in the fourth quarter a year ago. The Company reported net income of $1.6 million, or $0.09 per share, an increase of 2.9% compared to $1.5 million, in the fourth quarter of fiscal 2021. IS&S recorded tax expense in the fourth quarter of fiscal 2022 of $0.7 million, compared to $0.4 million in the fourth quarter of fiscal 2021.
Shahram Askarpour, Chief Executive Officer of IS&S, said, “The fourth quarter was another solid quarter of growth in revenue and profitability. Revenue and earnings were up for the fourth consecutive year, driven by top-line growth and an increase in operating leverage. Total cash flows more than doubled for the second consecutive year. We are well positioned to accelerate our revenue and earnings growth and take advantage of organic and inorganic opportunities to generate strong returns for our internal and external stakeholders.”
The Company’s cash on hand increased to $17.3 million as of September 30, 2022, with net cash flows of $2.5 million from investing activities in the fourth quarter due to the sale of a PC-12 airplane. IS&S generated $6.1 million of cash flows from operating activities for the full fiscal year 2022. The Company continues to maintain its strong financial condition and flexibility with significant liquidity and no debt.
New orders in the fourth quarter of fiscal 2022 were approximately $6.5 million and backlog as of September 30, 2022 was $11.8 million. Only purchase orders in hand from the Pilatus PC-24, Textron King Air and the KC-46A long-term programs are included in the total backlog. IS&S expects these programs to remain in production for approximately a decade and believes that they will continue to add to production sales already included in the backlog.
Full Year Fiscal 2022 Results
Total sales for the fiscal year ended September 30, 2022, were $27.7 million up 20.4% compared to $23.0 million for the fiscal year ended September 30, 2021. Operating income of $6.0 million was up 54.5% from $3.9 million in fiscal 2021. Net income for fiscal 2022 was $5.5 million, or $0.32 per share, compared to $5.1 million, or $0.29 per share, in fiscal 2021. Net income in fiscal 2022 included a $1.1 million gain on the sale of an asset. The gain was mostly offset by increased general & administrative expenses of approximately $1.0 million incurred throughout the year due to higher legal and professional fees related to the passing of former Chairman and CEO Geoffrey Hedrick, changes in the Board of Directors, the hiring of a new CFO, and other legal fees associated with the filing of the S-3 Shelf Registration and Rights Plan. In fiscal 2021, net income was aided by a $1.1 million tax benefit from the release of deferred tax valuation allowances in the third quarter. The tax benefit led to a net income differential of $2.9 million from 2021 to 2022, reflecting the tax expense of $1.8 million in 2022 compared to the $1.1 million tax benefit in 2021.
Conference Call
The Company will be hosting a conference call today, Wednesday, December 14, 2022, at 4:30 p.m. ET to discuss these results and the Company’s business outlook and product development. Participants may access the call by calling 1-877-451-6152 or 1-201-389-0879, and requesting to join the Innovative Solutions & Support, Inc. earnings call. A live webcast will be also be available at https://innovative-ss.com/investor-relations/events-presentations/.
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.
Certain matters contained herein that are not descriptions of historical facts are “forward-looking” (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include 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, those discussed in filings made by the Company 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, which reflect management’s views only as of the date hereof. 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 & Support, Inc.
Consolidated Statements of Operations
(unaudited)
|
|
|
|
|
For the Fiscal Quarter Ended September 30,
|
|
For the Fiscal Year Ended September 30,
|
| Net sales: |
|
2022
|
|
2021
|
|
2022
|
|
2021
|
| Product |
|
|
7,000,379
|
|
|
6,873,116
|
|
$
|
27,279,750
|
|
$
|
22,760,083
|
|
| Engineering development contracts |
|
|
262,742
|
|
|
|
|
460,945
|
|
|
284,713
|
|
| Total net sales |
|
|
7,263,121
|
|
|
6,873,116
|
|
|
27,740,695
|
|
|
23,044,796
|
|
|
|
|
|
|
|
|
|
|
| Cost of sales: |
|
|
|
|
|
|
|
|
| Product |
|
|
2,651,817
|
|
|
2,914,802
|
|
|
10,905,799
|
|
|
10,185,510
|
|
| Engineering development contracts |
|
|
143,768
|
|
|
|
|
160,515
|
|
|
77,656
|
|
| Total cost of sales |
|
|
2,795,585
|
|
|
2,914,802
|
|
|
11,066,314
|
|
|
10,263,166
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
4,467,536
|
|
|
3,958,314
|
|
|
16,674,381
|
|
|
12,781,630
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Research and development |
|
|
642,203
|
|
|
686,172
|
|
|
2,705,140
|
|
|
2,622,919
|
|
| Selling, general and administrative |
|
|
1,527,900
|
|
|
1,410,322
|
|
|
6,753,915
|
|
|
6,257,732
|
|
| Total operating expenses |
|
|
2,170,103
|
|
|
2,096,494
|
|
|
9,459,055
|
|
|
8,880,651
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
2,297,433
|
|
|
1,861,820
|
|
|
7,215,326
|
|
|
3,900,979
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
65,232
|
|
|
23,912
|
|
|
61,051
|
|
|
1,234
|
|
| Other income |
|
|
50,179
|
|
|
96
|
|
|
65,232
|
|
|
74,906
|
|
| Income before income taxes |
|
|
2,412,844
|
|
|
1,885,828
|
|
|
7,341,609
|
|
|
3,977,119
|
|
|
|
|
|
|
|
|
|
|
| Income tax (benefit) expense |
|
|
761,468
|
|
|
355,569
|
|
|
1,817,831
|
|
|
(1,087,783
|
)
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
1,651,376
|
|
|
1,530,259
|
|
$
|
5,523,778
|
|
$
|
5,064,902
|
|
|
|
|
|
|
|
|
|
|
| Net income per common share: |
|
|
|
|
|
|
|
|
| Basic |
|
$
|
0.10
|
|
$
|
0.09
|
|
$
|
0.32
|
|
$
|
0.29
|
|
| Diluted |
|
$
|
0.10
|
|
$
|
0.09
|
|
$
|
0.32
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| Basic |
|
|
17,256,750
|
|
|
17,225,423
|
|
|
17,256,750
|
|
|
17,225,423
|
|
| Diluted |
|
|
17,257,871
|
|
|
17,226,620
|
|
|
17,257,871
|
|
|
17,226,620
|
|
|
|
|
|
|
|
|
|
|
|
|
Innovative Solutions and Support, Inc.
Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
September 30, |
|
September 30, |
|
|
|
2022
|
|
|
|
2021
|
|
| ASSETS |
| Current assets |
|
|
|
|
| Cash and cash equivalents |
|
$
|
17,250,546
|
|
|
$
|
8,265,606
|
|
| Accounts receivable |
|
|
4,297,457
|
|
|
|
4,046,337
|
|
| Contract asset |
|
|
162,742
|
|
|
|
-
|
|
| Inventories |
|
|
5,349,104
|
|
|
|
4,545,392
|
|
| Prepaid expenses and other current assets |
|
|
1,142,470
|
|
|
|
833,076
|
|
|
|
|
|
|
| Total current assets |
|
|
28,202,319
|
|
|
|
17,690,411
|
|
|
|
|
|
|
| Property and equipment, net |
|
|
6,292,189
|
|
|
|
8,143,483
|
|
| Deferred income taxes |
|
|
46,487
|
|
|
|
1,063,822
|
|
| Other assets |
|
|
164,328
|
|
|
|
188,284
|
|
|
|
|
|
|
| Total assets |
|
$
|
34,705,323
|
|
|
$
|
27,086,000
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Accounts payable |
|
$
|
708,845
|
|
|
$
|
623,620
|
|
| Accrued expenses |
|
|
2,972,275
|
|
|
|
1,431,115
|
|
| Contract liability |
|
|
135,686
|
|
|
|
61,330
|
|
| Contract liability - related party |
|
|
123,497
|
|
|
|
356,174
|
|
|
|
|
|
|
| Total current liabilities |
|
|
3,940,303
|
|
|
|
2,472,239
|
|
|
|
|
|
|
| Other liabilities |
|
|
15,065
|
|
|
|
28,680
|
|
|
|
|
|
|
| Total liabilities |
|
|
3,955,368
|
|
|
|
2,500,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 September 30, 2022 and 2021 |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
| Common stock, $.001 par value: 75,000,000 shares authorized, 19,412,664 and |
|
|
|
|
| 19,342,823 issued at September 30, 2022 and 2021, respectively |
|
|
19,413
|
|
|
|
19,343
|
|
|
|
|
|
|
| Additional paid-in capital |
|
|
52,458,121
|
|
|
|
51,817,095
|
|
| Accumulated deficit |
|
|
(359,042
|
)
|
|
|
(5,882,820
|
)
|
| Treasury stock, at cost, 2,096,451 shares at September 30, 2022 and at |
|
|
|
|
| September 30, 2021 |
|
|
(21,368,537
|
)
|
|
|
(21,368,537
|
)
|
|
|
|
|
|
| Total shareholders' equity |
|
|
30,749,955
|
|
|
|
24,585,081
|
|
|
|
|
|
|
| Total liabilities and shareholders' equity |
|
$
|
34,705,323
|
|
|
$
|
27,086,000
|
|
|
|
|
|
|
|
|
Innovative Solutions and Support, Inc.
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
For the Fiscal Year Ended September 30, |
|
|
|
|
2022
|
|
|
|
2021
|
|
|
|
2020
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
| Net income |
|
|
$
|
5,523,778
|
|
|
$
|
5,064,902
|
|
|
$
|
3,269,783
|
|
| Adjustments to reconcile net income to net cash |
|
|
|
|
|
|
|
| provided by operating activities: |
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
|
368,499
|
|
|
|
432,176
|
|
|
|
433,510
|
|
| Share-based compensation expense |
|
|
|
|
|
|
|
| Stock options |
|
|
|
166,617
|
|
|
|
181,350
|
|
|
|
17,337
|
|
| Stock awards |
|
|
|
173,325
|
|
|
|
159,980
|
|
|
|
160,006
|
|
| Gain on disposal of property and equipment |
|
|
|
(1,191,743
|
)
|
|
|
-
|
|
|
|
-
|
|
| Excess and obsolete inventory cost |
|
|
|
-
|
|
|
|
(100,446
|
)
|
|
|
66,511
|
|
| Deferred income taxes |
|
|
|
1,017,335
|
|
|
|
(1,193,511
|
)
|
|
|
38
|
|
| (Increase) decrease in: |
|
|
|
|
|
|
|
| Accounts receivable |
|
|
|
(251,120
|
)
|
|
|
322,774
|
|
|
|
(2,020,574
|
)
|
| Contract asset |
|
|
|
(162,742
|
)
|
|
|
-
|
|
|
|
80,182
|
|
| Inventories |
|
|
|
(708,859
|
)
|
|
|
(153,611
|
)
|
|
|
112,848
|
|
| Prepaid expenses and other current assets |
|
|
|
(309,394
|
)
|
|
|
(157,967
|
)
|
|
|
(33,060
|
)
|
| Other non-current assets |
|
|
|
-
|
|
|
|
-
|
|
|
|
(96,269
|
)
|
| Increase (decrease) in: |
|
|
|
|
|
|
|
| Accounts payable |
|
|
|
85,224
|
|
|
|
(167,272
|
)
|
|
|
(288,181
|
)
|
| Accrued expenses |
|
|
|
1,272,826
|
|
|
|
(4,655
|
)
|
|
|
207,568
|
|
| Income taxes |
|
|
|
269,015
|
|
|
|
104,640
|
|
|
|
(1,666
|
)
|
| Contract liability |
|
|
|
74,356
|
|
|
|
(242,835
|
)
|
|
|
284,684
|
|
| Contract liability - related party |
|
|
|
(232,677
|
)
|
|
|
346,974
|
|
|
|
(550
|
)
|
| Net cash provided by operating activities |
|
|
|
6,094,440
|
|
|
|
4,592,499
|
|
|
|
2,192,167
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
| Purchases of property and equipment |
|
|
|
(161,230
|
)
|
|
|
(340,678
|
)
|
|
|
(118,797
|
)
|
| Proceeds from the sale of property and equipment |
|
|
|
2,750,576
|
|
|
|
-
|
|
|
|
-
|
|
| Net cash provided by (used in) investing activities |
|
|
|
2,589,346
|
|
|
|
(340,678
|
)
|
|
|
(118,797
|
)
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
| Proceeds from paycheck protection program |
|
|
|
-
|
|
|
|
-
|
|
|
|
1,203,900
|
|
| Repayment of paycheck protection program |
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,203,900
|
)
|
| Proceeds from exercise of stock options |
|
|
|
301,154
|
|
|
|
17,010
|
|
|
|
175,143
|
|
| Tax withholding related to cashless exercise of stock options |
|
|
|
-
|
|
|
|
-
|
|
|
|
(880,476
|
)
|
| Dividend paid |
|
|
|
-
|
|
|
|
(19,788,092
|
)
|
|
|
-
|
|
| Net cash provided by (used in) financing activities |
|
|
|
301,154
|
|
|
|
(19,771,082
|
)
|
|
|
(705,333
|
)
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in cash and cash equivalents and restricted cash |
|
|
|
8,984,940
|
|
|
|
(15,519,261
|
)
|
|
|
1,368,037
|
|
| Cash and cash equivalents and restricted cash, beginning of year |
|
|
|
8,265,606
|
|
|
|
23,784,867
|
|
|
|
22,416,830
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents and restricted cash, end of year |
|
|
$
|
17,250,546
|
|
|
$
|
8,265,606
|
|
|
$
|
23,784,867
|
|
|
|
|
|
|
|
|
|
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
| Cash paid for income taxes |
|
|
$
|
531,481
|
|
|
$
|
1,089
|
|
|
$
|
2,456
|
|
| Cash received from income tax refund |
|
|
|
-
|
|
|
|
-
|
|
|
|
309,712
|
|
|
|
|
|
|
|
|
|
| SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION |
|
|
|
|
|
|
|
| Cashless exercise of stock options |
|
|
|
-
|
|
|
|
-
|
|
|
|
1,635,000
|
|
| Accrual of dividends payable |
|
|
|
-
|
|
|
|
-
|
|
|
|
11,180,900
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221214005928/en/