Innovative Solutions & Support, Inc. (“IS&S” or the
“Company”) (NASDAQ: ISSC) today announced its financial results for
the third quarter of fiscal year 2023, which ended June 30,
2023.
For the third quarter of fiscal 2023, net sales increased 14.8%
to $8.0 million compared to $6.9 million in the third quarter a
year ago. Gross profit in the third quarter of 2023 was $4.7
million, or 59.5% of sales, compared to $4.1 million, or 58.5% of
sales in the third quarter of 2022. The Company reported net income
of $1.4 million, or $0.08 per share in the third quarter, which was
flat to prior year third quarter. The net income reflects an
increase in sales at a relatively consistent gross profit, with
increases in general and administrative and research and
development expenses reflecting the Company’s strategy to invest in
and strengthen the organization to support future growth. The
Company completed an exclusive license and asset acquisition of
several Honeywell product lines on June 30, 2023. The Company
did not recognize any revenues and net income related to the
product lines in the third quarter of 2023.
Shahram Askarpour, Chief Executive Officer of IS&S, said,
“In the third quarter we successfully executed on both our short-
and long-term strategies while delivering attractive returns for
our shareholders. Most significantly, we licensed several
product lines from Honeywell Aerospace, enhancing our current
offering with product lines that can be found on literally
thousands of aircraft in our target air transport and business
aviation markets, with potential to expand that market to the
military platform. We expect this license and asset acquisition,
together with continued strong organic revenue such as achieved in
this quarter, to represent an important inflection point in our
revenue growth rate, which we anticipate will have a one-time
annual impact of 40%, with an even more significant impact on
earnings, where we expect EBITDA to increase by approximately 75%,
once operations have been fully integrated in 2024. In addition, it
enables us to achieve our objective to better leverage our existing
infrastructure, sustain our attractive margins, and be accretive to
our earnings in 2024.”
Askarpour continued, “Core operations were also strong in the
quarter, with 15% organic top line growth and a significant
increase in gross profits. This profitability supports our long-
term vision that the industry is headed toward more autonomous
flight, which requires technology to reduce pilot workload while
improving safety. We have undertaken a meaningful increase in our
research and development budget to develop new technologies that
will be responsive to the evolving market, and we are doing so
while still delivering attractive returns for our shareholders. We
are excited by the successes we’ve achieved so far this year –
growing organically, completing an accretive licenses and asset
acquisition, investing for the future – while continuing to
generate strong earnings and cash flow.”
The Company had $2.6 million of cash on hand as of June 30,
2023, after utilizing the majority of its existing cash for the
exclusive license and asset acquisition of the Honeywell product
lines. Over the first nine months of the year, the company
generated $6.4 million of cash flow from operations. In the fiscal
third quarter, to further strengthen its financial position and
provide additional liquidity, the Company secured a $20 million
term loan. IS&S was able to maintain a strong financial
condition with sufficient cash on hand to run the operations of the
business with ample liquidity, with access to an increased
borrowing capacity.
New orders in the third quarter of fiscal 2023 were
approximately $6.9 million, and backlog as of June 30, 2023 was
$13.8 million, compared to backlog of $12.6 million as of June 30,
2022. Only purchase orders in hand are included in our sales
backlog, which primarily consist 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 add to the total
backlog.
Conference Call
The Company will be hosting a conference call on Thursday,
August 10, 2023 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: 877-451-6152 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.
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.
Such 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, and the impact of
licenses, including the Honeywell license. 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 licensed product
lines, including the Honeywell asset licensed products, 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 December 31, 2022, 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 &
Support, Inc.
Condensed Consolidated
Statements of Operations
(unaudited)
Three Months Ended June 30, Nine Months Ended June
30,
2023
2022
2023
2022
Net Sales: Product
$
7,893,624
$
6,935,976
$
21,383,435
$
20,279,371
Engineering development contracts
65,583
432,482
198,203
Returns and allowances
-
-
-
-
Total net sales
7,959,208
6,935,976
21,815,917
20,477,574
Cost of sales: Product
3,202,870
2,879,462
8,538,219
8,253,982
Engineering development contracts
21,692
79,098
16,748
Total cost of sales
3,224,562
2,879,462
8,617,317
8,270,729
Gross profit
4,734,645
4,056,514
13,198,600
12,206,845
Operating expenses: Research and development
851,296
676,381
2,387,939
2,062,937
Selling, general and administrative
2,395,714
1,694,233
7,104,212
5,226,015
Total operating expenses
3,247,010
2,370,614
9,492,151
7,288,952
Operating income
1,487,635
1,685,900
3,706,449
4,917,893
Interest income
185,651
10,429
432,495
10,871
Interest (expense) Other income
90,050
21,608
131,504
49,401
Income before income taxes
1,763,337
1,717,937
4,270,448
4,978,165
Income tax expense
339,958
358,763
877,315
1,056,363
Net income
$
1,423,379
$
1,359,174
$
3,393,133
$
3,921,802
Net income per common share: Basic
$
0.08
$
0.08
$
0.20
$
0.23
Diluted
$
0.08
$
0.08
$
0.20
$
0.23
Cash dividends per share:
$
-
$
-
$
-
$
-
Weighted average shares outstanding: Basic
17,383,815
17,261,349
17,383,815
17,261,349
Diluted
17,383,815
17,261,349
17,383,815
17,261,349
Innovative Solutions & Support, Inc.
Consolidated Statements of
Cash Flows
(unaudited)
For the Three Months Ended March 31 ,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$
1,423,379
$
1,359,174
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
87,503
90,028
Share-based compensation expense Stock options
110,029
45,089
Stock awards
104,054
13,331
Loss on disposal of property and equipment
357
Impairment of long-lived aassets
44,400
Deferred income taxes
(50,851
)
258,596
(Increase) decrease in: Accounts receivable
(1,977,368
)
1,052,330
Unbilled Receivables
(89,420
)
Inventories
157,223
(120,920
)
Prepaid expenses and other current assets
5,513
114,298
Other non-current assets
2,601
Income taxes receivable
-
-
Increase (decrease) in: Accounts payable
(732,085
)
7,788
Accrued expenses
(118,189
)
290,153
Income taxes payable
(152,191
)
(179,833
)
Contract liability
(88,778
)
52,388
Net cash provided by operating activities
(1,274,181
)
2,982,779
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
property and equipment
(84,933
)
(76,872
)
Proceeds from the sale of property and equipment
-
Acquisition of a business
(35,860,000
)
Net cash used in investing activities
(35,944,933
)
(76,872
)
CASH FLOWS FROM FINANCING ACTIVITIES:
-
17,154
Proceeds from exercise of stock options
-
Debt proceeds
20,000,000
Net cash provided by financing activities
20,000,000
17,154
Net increase in cash and cash equivalents
(17,219,114
)
2,923,061
Cash and cash equivalents, beginning of quarter
19,791,346
11,618,840
Cash and cash equivalents, end of quarter
$
2,572,233
$
14,541,901
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809383854/en/
Michael Linacre 610-646-0350 mlinacre@innovative-ss.com
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