Innovative Solutions & Support, Inc. Announces First Quarter Fiscal 2023 Financial Results

Rhea-AI Summary

Innovative Solutions & Support (ISSC) reported Q1 fiscal 2023 results, with net sales of $6.5 million, down from $6.7 million in Q1 fiscal 2022. The gross profit was $3.7 million, a decrease from $4.0 million, and net income fell to $0.7 million ($0.04 per share) from $1.1 million ($0.07 per share). Increased general and administrative expenses, notably from non-cash compensation and legal fees, contributed to this decline. Despite this, cash generated from operations rose to $2.2 million, and total cash on hand reached $19.4 million. The company's backlog improved to $8.5 million, bolstered by ongoing demand across all segments.

Positive

• Cash on hand increased to $19.4 million.
• Operating cash flow reached $2.2 million, up from $1.4 million in Q1 fiscal 2022.
• Backlog improved to $8.5 million, up from $6.2 million a year ago.

Negative

• Net income decreased to $0.7 million from $1.1 million year-over-year.
• Gross profit declined to $3.7 million compared to $4.0 million in Q1 fiscal 2022.
• Increased general and administrative expenses affected profitability.

EXTON, Pa.--(BUSINESS WIRE)-- Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the first quarter of fiscal year 2023, which ended December 31, 2022.

For the first quarter of fiscal 2023, net sales were $6.5 million compared to $6.7 million in the first quarter a year ago. Gross profit in the first quarter of 2023 was $3.7 million compared to $4.0 million in the first quarter of 2022. The Company reported net income of $0.7 million, or $0.04 per share in the first quarter, compared to $1.1 million, or $0.07 per share in the first quarter of fiscal 2022. The decrease in net income was driven by increases in general and administrative expenses, mainly attributable to non-cash, long-term incentive compensation and legal fees. IS&S generated $2.2 million in cash versus $1.4 million in the first quarter of fiscal 2022. Tax expense in the first quarter of fiscal 2023 was $0.2 million, compared to $0.3 million in the first quarter of fiscal 2022.

Shahram Askarpour, Chief Executive Officer of IS&S, said, “Overall, we continue to see solid demand in each segment of the business, including OEM, after-market and repairs, as we continue to generate strong cash flows. Looking forward, we are focused on driving organic and inorganic revenue growth as we work to increase our capacity utilization and operating leverage.”

The Company’s cash on hand increased to $19.4 million as of December 31, 2022, with $1.8 million generated from operating activities during the three months ended December 31, 2022. The Company continues to maintain its strong financial condition and flexibility with significant liquidity and no debt.

New orders in the first quarter of fiscal 2023 were approximately $3.3 million, and backlog as of December 31, 2022 was $8.5 million, compared to backlog of $6.2 million as of December 31, 2021. 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 anticipates that they will continue to add to the total backlog incrementally.

Conference Call

The Company will be hosting a conference call on Tuesday, February 14, 2023 at 4:30 PM 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.

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. Condensed Consolidated Statements of Operations (unaudited)
				Three Months Ended December 31,
				2022			2021
Net Sales:
Product				$	6,149,357		$	6,695,778
Engineering development contracts					366,899			-
Returns and allowances					-			-
Total net sales					6,516,256			6,695,778
Cost of sales:
Product					2,735,046			2,728,057
Engineering development contracts					57,406			-
Total cost of sales					2,792,452			2,728,057
Gross profit					3,723,804			3,967,721
Operating expenses:
Research and development					670,445			736,525
Selling, general and administrative					2,261,863			1,806,982
Total operating expenses					2,932,308			2,543,507
Operating income					791,496			1,424,214
Interest income					115,892			96
Interest (expense)
Other income					18,196			16,238
Income before income taxes					925,584			1,440,548
Income tax expense					226,933			307,490
Net income				$	698,651		$	1,133,058
Net income per common share:
Basic				$	0.04		$	0.07
Diluted				$	0.04		$	0.07
Cash dividends per share:				$	-		$	-
Weighted average shares outstanding:
Basic					17,316,766			17,246,372
Diluted					17,326,177			17,246,372

Innovative Solutions and Support, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
				December 31,				September 30,
				2022				2022
ASSETS
Current assets
Cash and cash equivalents				$	19,443,231			$	17,250,546
Restricted cash					-				-
Accounts receivable					3,316,519				4,297,457
Contract asset					162,742				162,742
Inventories					5,252,295				5,349,104
Prepaid expenses and other current assets					1,049,206				1,142,470
Total current assets					29,223,993				28,202,319
Property and equipment, net					6,239,496				6,292,189
Deferred income taxes					331,176				46,487
Other assets					160,862				164,328
Total assets				$	35,955,527			$	34,705,323
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of capitalized lease obligations				$	-			$	-
Accounts payable				$	842,262			$	708,845
Dividends payable					-				-
Accrued expenses					2,508,971				2,972,275
Contract liability					83,221				135,686
Total current liabilities					3,443,012				3,940,303
Long-term portion of capitalized lease obligations					-				-
Deferred revenue					-				-
Deferred income taxes					-				-
Other liabilities					421,938				15,065
Total liabilities					3,864,950				3,955,368
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 December 31, 2022 and September 30, 2022					-				-
Common stock, $.001 par value: 75,000,000 shares authorized,
19,470,248 and 19,412,664 issued at December 31, 2022 and September 30, 2022					19,470				19,413
Retained Earnings (accumulated deficit)					339,609				(359,042	)
Treasury stock, at cost, 2,096,451 shares at December 31, 2022
and September 30, 2022					(21,368,537	)			(21,368,537	)
Total shareholders' equity					32,090,577				30,749,955
Total liabilities and shareholders' equity				$	35,955,527			$	34,705,323

Innovative Solutions & Support, Inc.
Statements of Cash Flows
(unaudited)
								For the Three Months Ended December 31 ,
								2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income							$	698,651			$	1,133,058
	Adjustments to reconcile net income to net cash
		provided by operating activities:
		Depreciation and amortization							85,409				92,372
		Share-based compensation expense
			Stock options						-				45,591
			Stock awards						283,195				40,018
		Deferred income taxes							(284,689	)			231,298
		(Increase) decrease in:
			Accounts receivable						980,938				325,121
			Inventories						96,809				(61,083	)
			Prepaid expenses and other current assets						93,264				(48,402	)
		Increase (decrease) in:
			Accounts payable						133,417				(123,156	)
			Accrued expenses						(614,657	)			(111,624	)
			Income taxes payable						511,622				76,192
			Contract liability						(167,404	)			(81,650	)
				Net cash provided by operating activities					1,816,555				1,517,735
CASH FLOWS FROM INVESTING ACTIVITIES:
			Purchases of property and equipment						(32,716	)			(77,348	)
			Proceeds from the sale of property and equipment										-
				Net cash used in investing activities					(32,716	)			(77,348	)
CASH FLOWS FROM FINANCING ACTIVITIES:
			Proceeds from exercise of stock options						408,846				-
				Net cash provided by financing activities					408,846				-
Net increase in cash and cash equivalents									2,192,685				1,440,387
Cash and cash equivalents, beginning of year									17,250,546				8,265,606
Cash and cash equivalents, end of year								$	19,443,231			$	9,705,993

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230214005658/en/

Investor Relations:

Michael Callahan

203-682-8311

isscir@icrinc.com



Press:

Jason Zywalewski

+1 610.646.9800 x609

jzywalewski@innovative-ss.com

Source: Innovative Solutions & Support, Inc.

FAQ

What were Innovative Solutions & Support's earnings for Q1 fiscal 2023?

Innovative Solutions & Support reported net income of $0.7 million, or $0.04 per share for Q1 fiscal 2023.

How did ISSC's revenue change in Q1 fiscal 2023?

In Q1 fiscal 2023, ISSC's net sales were $6.5 million, down from $6.7 million in Q1 fiscal 2022.

What is ISSC's cash position as of December 31, 2022?

As of December 31, 2022, ISSC had cash on hand of $19.4 million.

What is the backlog amount for ISSC as of December 31, 2022?

ISSC's backlog as of December 31, 2022 was $8.5 million, an increase from $6.2 million the previous year.

When will ISSC discuss its business outlook?

ISSC will host a conference call on February 14, 2023, to discuss its results and business outlook.