Press release

Innovative Solutions & Support, Inc. Announces Fourth Quarter and Full Year Fiscal 2023 Financial Results

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Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the fourth quarter and full fiscal year 2023, which ended September 30, 2023.

For the fourth quarter of fiscal 2023, IS&S reported net sales of $13 million, up 79% from $7.3 million in the fourth quarter a year ago. The Company reported net income of $2.6 million, or $0.15 per share, increases of 63% and 67%, respectively, compared to $1.6 million, or $0.09 per share, in the fourth quarter of fiscal 2022.

Gross profit in the fourth quarter of 2023 was $8.1 million, or 62% of sales, compared to $4.5 million, also 62% of sales in the fourth quarter of 2022.

The increase in sales and earnings in the fourth quarter of 2023 primarily reflects the impact of the previously announced addition of 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, “I am pleased to report our fifth consecutive year of both top and bottom-line growth as a result of one of the best quarters in the Company’s recent history. The results include some customer-directed accelerated shipments of the acquired Honeywell products to mitigate any impacts from potential delivery delays over the next two quarters as equipment and inventory are transferred to IS&S. The ongoing integration of the Honeywell product lines is proceeding well, and we remain confident that annualized revenues will increase by approximately 40% from pre-acquisition levels once operations have been fully integrated in fiscal 2024. The integration of the Honeywell product lines enhances our current product offerings in the Air Transport, Military and Business Aviation Markets and has provided us with an introduction to numerous operators with whom we did not previously have relationships, thereby opening a large new market opportunity for our other products.”

For the fiscal year 2023, the Company generated $2.1 million of cash flow from operations. The Company had $3.1 million of cash on hand as of September 30, 2023, which has increased during the quarter ended December 31, 2023 because of the collection of receivables and the sale of the Company’s King Air aircraft. As of December 19, 2023 the Company’s cash on hand is currently over $8 million.

New orders in the fourth quarter of fiscal 2023 were approximately $12.7 million and were $36.5 million for the full fiscal 2023 year. Backlog as of September 30, 2023, was $13.5 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 into backlog.

Full Year Fiscal 2023 Results

Total revenues for the fiscal year ended September 30, 2023, were $34.8 million, up 26% from $27.7 million for the fiscal year ended September 30, 2022. Net income for fiscal 2023 was $6.0 million, or $0.35 per share, compared to $5.5 million, or $0.32 per share, in fiscal 2022. Net income in fiscal 2022 included a $1.1 million gain on the sale of an asset.

Conference Call

The Company will be hosting a conference call on Thursday, December 21, 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: 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. 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, , the integration of the Honeywell product lines, including how the product lines enhance our current product offerings in the Air Transport, Military and Business Aviation Markets and have provided us with an introduction to numerous operators with whom we did not previously have a relationship, creating a large new market for many of our other products, the impact of licenses, including the Honeywell license, and the timing of our long-term programs remaining in production and expectations regarding a large new market opportunity for our other products. 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, 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 and Support, Inc.
Consolidated Balance Sheets
(unaudited)
 
September 30, September 30,

 

2023

 

 

2022

 

ASSETS
Current assets
Cash and cash equivalents

$

3,097,193

 

$

17,250,546

 

Accounts receivable

 

9,743,714

 

 

4,297,457

 

Contract asset

 

487,139

 

 

162,742

 

Inventories

 

6,139,713

 

 

5,349,104

 

Prepaid inventory

 

12,069,114

 

 

 

Prepaid expenses and other current assets

 

1,073,012

 

 

1,142,470

 

Asset held for sale

 

2,063,818

 

 

 

 
Total current assets

 

34,673,703

 

 

28,202,319

 

 
Goodwill

 

3,557,886

 

 

 

Intangible assets, net

 

16,185,321

 

 

60,348

 

Property and equipment, net

 

7,892,427

 

 

6,292,189

 

Deferred income taxes

 

456,392

 

 

46,487

 

Other assets

 

191,722

 

 

103,980

 

 
Total assets

$

62,957,451

 

$

34,705,323

 

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

$

2,000,000

 

$

 

Accounts payable

 

1,337,275

 

 

708,845

 

Accrued expenses

 

2,918,325

 

 

2,972,275

 

Contract liability

 

143,359

 

 

259,183

 

 
Total current liabilities

 

6,398,959

 

 

3,940,303

 

 
Long-term debt

 

17,500,000

 

 

 

Other liabilities

 

421,508

 

 

15,065

 

 
Total liabilities

 

24,320,467

 

 

3,955,368

 

 
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 September 30, 2021 and 2020

 

 

 

 

 
Common stock, $.001 par value: 75,000,000 shares authorized, 19,543,441 and 19,412,664 issued at September 30, 2023 and 2022, respectively

 

19,543

 

 

19,413

 

 
Additional paid-in capital

 

54,317,265

 

 

52,458,121

 

Retained earnings (accumulated deficit)

 

5,668,713

 

 

(359,042

)

Treasury stock, at cost, 2,096,451 shares at September 30, 2023 and at September 30, 2022

 

(21,368,537

)

 

(21,368,537

)

 
Total shareholders’ equity

 

38,636,984

 

 

30,749,955

 

 
Total liabilities and shareholders’ equity

$

62,957,451

 

$

34,705,323

 

Innovative Solutions and Support, Inc.
Consolidated Statements of Operations
(unaudited)
 
Three months ended Twelve months ended
September 30, September 30,

 

2023

 

 

2022

 

2023

 

 

2022

 
Sales

$

12,992,596

 

$

7,263,121

$

34,808,513

 

$

27,740,695

 
Cost of sales

 

4,880,125

 

 

2,795,585

 

13,497,442

 

 

11,066,314

 
Gross profit

 

8,112,471

 

 

4,467,536

 

21,311,071

 

 

16,674,381

 
Operating expenses:
Research and development

 

741,579

 

 

642,303

 

3,129,518

 

 

2,705,140

Selling, general and administrative

 

3,718,293

 

 

1,527,900

 

10,822,505

 

 

6,753,915

Total operating expenses

 

4,459,872

 

 

2,170,203

 

13,952,023

 

 

9,459,055

 
Operating income

 

3,652,599

 

 

2,297,333

 

7,359,048

 

 

7,215,326

 
Interest (expense)

 

(393,281

)

 

 

(393,281

)

 

Interest income

 

85,693

 

 

50,179

 

518,188

 

 

61,051

Other income

 

19,813

 

 

15,931

 

151,317

 

 

65,232

 
Income before income taxes

 

3,364,824

 

 

2,363,443

 

7,635,272

 

 

7,341,609

 
Income tax expense

 

730,202

 

 

761,468

 

1,607,517

 

 

1,817,831

 
Net income

$

2,634,622

 

$

1,601,975

$

6,027,755

 

$

5,523,778

 
Net income per common share:
Basic

$

0.15

 

$

0.09

$

0.35

 

$

0.32

Diluted

$

0.15

 

$

0.09

$

0.35

 

$

0.32

 
 
Weighted average shares outstanding:
Basic

 

17,400,659

 

 

17,256,750

 

17,411,684

 

 

17,256,750

Diluted

 

17,451,314

 

 

17,257,871

 

17,427,278

 

 

17,257,871