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 CFOwill 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/