Innovative Solutions & Support, Inc. Announces First Quarter Fiscal 2024 Financial Results
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Insights
The reported 43% increase in net sales and 51% increase in net income for Innovative Solutions & Support, Inc. (IS&S) are significant indicators of the company's current growth trajectory. Such substantial year-over-year growth, particularly in the context of a recent acquisition, typically garners investor interest as it suggests successful integration and realization of synergies. The gross margin of 59.3% is notably high for the industry, indicating strong pricing power or cost management efficiency. The reduction in debt by approximately $8.9 million within a quarter is a positive signal for financial stability and may affect the company's creditworthiness positively.
From an operational cash flow perspective, generating $4.2 million is indicative of healthy business operations. The backlog of $14.6 million, while only including purchase orders in hand, provides visibility into future revenues, which is a critical factor for forecasting and valuation models. It is important for investors to monitor whether the company can maintain or increase the backlog, as it will be a driver of sustainable revenue streams.
The strategic acquisition of product lines from Honeywell appears to be a pivotal move for IS&S, opening up new market segments and contributing to a diversified product portfolio. This diversification can be a hedge against market volatility and sector-specific downturns. The mention of new market segments and recurring revenues suggests an expansion strategy that could lead to more stable long-term growth. Moreover, the association with long-term programs from established OEM customers like Pilatus, Textron and Boeing provides a level of prestige and reliability to the company's reputation in the market.
However, investors should be cautious about the reliance on a few long-term contracts, as any disruptions with these customers could significantly impact future revenues. The fact that products licensed from Honeywell do not typically enter backlog should be taken into account when evaluating the company's future sales pipeline and risk profile.
IS&S's involvement with high-profile aerospace programs such as the Boeing T-7 Red Hawk and the Boeing KC-46A indicates a strong foothold in the defense and aerospace sector. The expected decade-long production of these programs points to a stable demand outlook for IS&S's products. However, the aerospace and defense industry is subject to regulatory changes and shifts in government spending, which could influence the longevity and profitability of these contracts.
The integration of Honeywell's product lines is also a critical factor, as it reflects IS&S's capability to absorb and enhance its offerings with advanced technologies. The ability to maintain high gross margins in this industry is often a result of technological leadership and operational excellence, which are key competitive advantages. Understanding the specific technologies and the competitive landscape is essential for stakeholders to assess the company's potential to sustain and grow its market share.
For the first quarter of fiscal 2024, IS&S reported net sales of
Gross profit in the first quarter of 2024 was
Sales and earnings in the first 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.
Shahram Askarpour, Chief Executive Officer of IS&S, said, “We are pleased to report another quarter of year-over-year growth in both revenues and earnings. The integration of the product lines acquired from Honeywell is progressing and ongoing. These products complement our existing portfolio of products, offer recurring revenues, and introduce IS&S to a new market segment. As we continue to generate gross margins approaching
For the first quarter of fiscal 2024, the Company generated
New orders in the first quarter of fiscal 2024 were approximately
Conference Call
The Company will be hosting a conference call on Thursday, February 15, 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
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, how the product lines complement our existing portfolio of products, offer recurring revenues and introduce us to a new market segment, and expectations regarding growth of annualized revenues upon completion of such integration; 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. | ||||||||
Consolidated Balance Sheets | ||||||||
(unaudited) | ||||||||
December 31, | September 30, | |||||||
|
2023 |
|
|
2023 |
|
|||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ |
467,334 |
|
$ |
3,097,193 |
|
||
Accounts receivable |
|
5,583,593 |
|
|
9,743,714 |
|
||
Contract asset |
|
647,644 |
|
|
487,139 |
|
||
Inventories |
|
7,799,935 |
|
|
6,139,713 |
|
||
Prepaid inventory |
|
11,509,067 |
|
|
12,069,114 |
|
||
Prepaid expenses and other current assets |
|
919,639 |
|
|
1,073,012 |
|
||
Asset held for sale |
|
- |
|
|
2,063,818 |
|
||
Total current assets |
|
26,927,212 |
|
|
34,673,703 |
|
||
Goodwill |
|
3,557,886 |
|
|
3,557,886 |
|
||
Intangible assets, net |
|
15,916,821 |
|
|
16,185,321 |
|
||
Property and equipment, net |
|
7,931,009 |
|
|
7,892,427 |
|
||
Deferred income taxes |
|
1,141,048 |
|
|
456,392 |
|
||
Other assets |
|
224,221 |
|
|
191,722 |
|
||
Total assets | $ |
55,698,197 |
|
$ |
62,957,451 |
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ |
10,611,514 |
|
$ |
2,000,000 |
|
||
Accounts payable |
|
1,545,799 |
|
|
1,337,275 |
|
||
Accrued expenses |
|
2,984,947 |
|
|
2,918,325 |
|
||
Contract liability |
|
228,306 |
|
|
143,359 |
|
||
Total current liabilities |
|
15,370,566 |
|
|
6,398,959 |
|
||
Long-term debt |
|
- |
|
|
17,500,000 |
|
||
Other liabilities |
|
427,581 |
|
|
421,508 |
|
||
Total liabilities |
|
15,798,147 |
|
|
24,320,467 |
|
||
Commitments and contingencies |
|
- |
|
|
- |
|
||
Shareholders' equity | ||||||||
Preferred stock, 10,000,000 shares authorized, |
|
- |
|
|
- |
|
||
Common stock, |
|
19,549 |
|
|
19,543 |
|
||
Additional paid-in capital |
|
54,522,975 |
|
|
54,317,265 |
|
||
Retained earnings |
|
6,726,063 |
|
|
5,668,713 |
|
||
Treasury stock, at cost, 2,096,451 shares at December 31, 2023 and at September 30, 2023 |
|
(21,368,537 |
) |
|
(21,368,537 |
) |
||
Total shareholders' equity |
|
39,900,050 |
|
|
38,636,984 |
|
||
Total liabilities and shareholders' equity | $ |
55,698,197 |
|
$ |
62,957,451 |
|
||
Innovative Solutions and Support, Inc. | |||||||
Consolidated Statements of Operations | |||||||
(unaudited) | |||||||
Three months ended | |||||||
December 31, | |||||||
|
2023 |
|
2022 |
||||
Net Sales: | |||||||
Product | $ |
4,424,108 |
|
$ |
5,088,208 |
||
Customer service |
|
4,227,247 |
|
|
1,061,149 |
||
Engineering development contracts |
|
656,708 |
|
|
366,899 |
||
|
9,308,063 |
|
|
6,516,256 |
|||
Cost of sales: | |||||||
Product |
|
1,781,345 |
|
|
2,415,944 |
||
Customer service |
|
1,726,961 |
|
|
319,102 |
||
Engineering development contracts |
|
276,595 |
|
|
57,406 |
||
Total cost of sales |
|
3,784,901 |
|
|
2,792,452 |
||
Gross Profit |
|
5,523,162 |
|
|
3,723,804 |
||
Operating expenses: | |||||||
Research and development |
|
901,144 |
|
|
670,445 |
||
Selling, general and administrative |
|
3,006,819 |
|
|
2,261,863 |
||
Total operating expenses |
|
3,907,963 |
|
|
2,932,308 |
||
Operating income |
|
1,615,199 |
|
|
791,496 |
||
Interest (expense) |
|
(360,013 |
) |
|
- |
||
Interest income |
|
79,479 |
|
|
115,892 |
||
Other income |
|
17,699 |
|
|
18,196 |
||
Income before income taxes |
|
1,352,364 |
|
|
925,584 |
||
Income tax expense |
|
295,014 |
|
|
226,933 |
||
Net income | $ |
1,057,350 |
|
$ |
698,651 |
||
Net income per common share: | |||||||
Basic | $ |
0.06 |
|
$ |
0.04 |
||
Diluted | $ |
0.06 |
|
$ |
0.04 |
||
Weighted average shares outstanding: | |||||||
Basic |
|
17,451,362 |
|
|
17,316,766 |
||
Diluted |
|
17,474,906 |
|
|
17,326,177 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214548805/en/
Rell Winand – CFO
610-646-9800 X550
Source: Innovative Solutions & Support, Inc.
FAQ
What were the net sales for Innovative Solutions & Support (ISSC) in the first quarter of fiscal 2024?
What was the net income reported by ISSC in the first quarter of fiscal 2024?
What was the gross profit margin for ISSC in the first quarter of fiscal 2024?
What contributed to the revenue growth for ISSC in the first quarter of fiscal 2024?
What was the cash flow from operations for ISSC in the first quarter of fiscal 2024?