Innovative Solutions & Support, Inc. Announces Third Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) reported a 3% increase in net sales to $6.2 million for Q3 fiscal 2021, alongside a net income of $2.7 million, or $0.16 per share. The results included a $1.5 million tax benefit, marking a 108% rise year-over-year. With cash on hand at $7.5 million and operating cash flows of $1.5 million, the company remains debt-free and has distributed nearly $20 million to shareholders since September 2020. New orders totaled approximately $9.0 million, with a backlog of $9.5 million, a 40% increase from the previous quarter.

Positive

• Net sales up 3% year-over-year to $6.2 million in Q3 2021.
• Net income increased 108% to $2.7 million, or $0.16 per share.
• Cash on hand rose to $7.5 million with no debt.
• New orders in Q3 were approximately $9.0 million, backlog up 40% to $9.5 million.

Negative

• None.

Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the third quarter of fiscal 2021, ended June 30, 2021.

For the third quarter of fiscal 2021, the Company reported net sales of $6.2 million up 3% from the third quarter a year ago. The Company reported net income of $2.7 million, or $0.16 per share, which includes a $1.5 million tax benefit from the release of the deferred tax valuation allowance, up 108% from the third quarter of fiscal 2020.

Geoffrey Hedrick, Chairman and Chief Executive Officer of IS&S, said, “Revenues in the quarter were up both year-over-year, as well as sequentially from the second quarter of this year, as momentum builds. This growth was achieved during difficult times with the ongoing pandemic which is most encouraging and bodes well for the Company’s future.”

“We continue to expand in a number of our key markets. In air cargo conversions, demand remains robust for our Boeing 757 and 767 Flat Panel Display Systems, particularly from a premier on-line retailer, contributing to both our solid third quarter performance and growth in our backlog. OEM activity was also strong during the quarter, with an increase in the pace of autothrottle deliveries to Textron for the King Air. In fact, the August 2021 issue of Flying Magazine reviewed the King Air 360 and made it a point to feature our autothrottle with positive reviews. Flying Magazine called it ‘surely the star of the King Air 360’ from a pilot’s perspective, while Textron’s 360 technical marketing advisor and sales engineer called our autothrottle an ‘elegant little engineering solution.’ I’m pleased this highly respected aviation publication has validated the effort we have put into this groundbreaking control and safety solution for single-pilot aircraft. We look forward to building on our growing foundation of both retrofit and OEM programs as our strategy to create additional value for our shareholders.”

The Company’s cash on hand increased to $7.5 million on June 30, 2021, with net cash flows from operating activities of $1.5 million in the third quarter. Since September of 2020, nearly $20 million of cash has been distributed to shareholders while the Company remains in a strong financial position with significant liquidity and no debt.

New orders in the third quarter of fiscal 2021 were approximately $9.0 million and backlog as of June 30, 2021 increased 40% to $9.5 million, up from $6.7 million at March 31, 2021. New orders for the nine- month period ended June 30, 2021 were approximately $22.0 million. Backlog excludes potential future sole-source production orders from the Pilatus PC-24, Textron King Air and the KC-46A programs, which the Company expects to remain in production for approximately a decade. The Company expects that these contracts will add to production sales already in backlog.

Nine Months Results

Total sales for the nine months ended June 30, 2021 were $16.2 million up 6% from the nine months ended June 30, 2020. Net income for the nine months ended June 30, 2021 was $3.5 million, or $0.21 per share, up 75% from the first nine months of fiscal 2020. Net income in the first nine months of fiscal 2021 included $1.4 million of tax benefits, primarily those recognized in the third quarter as noted above.

Conference Call

The Company will be hosting a conference call on Thursday, August 12, 2021, at 11:00 a.m. 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: 877-270-2148 and ask to be joined into 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 and Support, Inc.
Consolidated Balance Sheets
		June 30,				September 30,
			2021				2020
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	7,482,863			$	12,603,967
Restricted cash			-				11,180,900
Accounts receivable			4,293,727				4,369,111
Inventories			4,838,811				4,291,335
Prepaid expenses and other current assets			697,329				675,109
Total current assets			17,312,730				33,120,422
Property and equipment, net			8,220,942				8,175,872
Deferred income taxes			1,331,928				-
Other assets			151,364				249,543
Total assets		$	27,016,964			$	41,545,837
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable		$	936,042			$	790,892
Dividend payable			-				11,180,900
Accrued expenses			1,543,487				1,361,960
Contract liability			1,528,694				313,365
Total current liabilities			4,008,223				13,647,117
Non-current deferred income taxes			-				129,689
Total liabilities			4,008,223				13,776,806
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 June 30, 2021 and September 30, 2020		$	-			$	-
Common stock, $.001 par value: 75,000,000 shares authorized, 19,342,823 and 19,310,835
issued at June 30, 2021 and September 30, 2020, respectively			19,343				19,311
Additional paid-in capital			51,771,014				51,458,787
(Accumulated deficit)			(7,413,079	)			(2,340,530	)
Treasury stock, at cost, 2,096,451 shares at June 30, 2021 and
September 30, 2020			(21,368,537	)			(21,368,537	)
Total shareholders' equity			23,008,741				27,769,031
Total liabilities and shareholders' equity		$	27,016,964			$	41,545,837

Innovative Solutions and Support, Inc.
Consolidated Statements of Operations
(unaudited)
		Three months ended							Nine months ended
		June 30,							June 30,
			2021				2020			2021				2020
Net Sales			6,180,183				5,953,689			16,171,680				15,300,182
Cost of sales			2,825,681				2,559,016			7,348,364				7,008,691
Gross profit			3,354,502				3,394,673			8,823,316				8,291,491
Operating expenses:
Research and development			646,795				870,805			1,936,747				2,249,439
Selling, general and administrative			1,512,138				1,279,422			4,847,410				4,514,085
Total operating expenses			2,158,933				2,150,227			6,784,157				6,763,524
Operating income			1,195,569				1,244,446			2,039,159				1,527,967
Interest income			107				7,767			1,138				152,358
Other income			17,231				16,261			50,994				44,760
Income before income taxes			1,212,907				1,268,474			2,091,291				1,725,085
Income tax (benefit) expense			(1,473,014	)			8,616			(1,443,352	)			(300,786	)
Net income		$	2,685,921			$	1,259,858		$	3,534,643			$	2,025,871
Net income per common share:
Basic		$	0.16			$	0.07		$	0.21			$	0.12
Diluted		$	0.16			$	0.07		$	0.21			$	0.12
Weighted average shares outstanding:
Basic			17,230,387				16,952,973			17,222,312				16,931,049
Diluted			17,231,438				17,087,275			17,223,908				17,097,414

 

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FAQ

What were the financial results of Innovative Solutions & Support for Q3 2021?

For Q3 2021, ISSC reported net sales of $6.2 million and net income of $2.7 million.

How much cash does Innovative Solutions & Support have?

As of June 30, 2021, ISSC had $7.5 million in cash on hand.

What is the backlog for Innovative Solutions & Support as of Q3 2021?

The backlog increased 40% to $9.5 million as of June 30, 2021.

What were the key drivers for the growth in revenue for ISSC?

Growth was driven by strong demand in air cargo conversions and OEM activities, particularly for Boeing systems.

What are the future expectations for Innovative Solutions & Support?

ISSC expects ongoing production contracts to add to sales in the future.