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Innovative Solutions & Support, Inc. Announces Third Quarter Fiscal 2020 Financial Results

Recent OEM Contract with Textron Further Solidifies Growing ThrustSense® Auto-Throttle Franchise

EXTON, Pa.--(BUSINESS WIRE)--Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the third quarter of fiscal 2020, ended June 30, 2020.


For the third quarter of fiscal 2020, the Company reported net sales of $6.0 million, up 30% from $4.6 million in the third quarter a year ago. The Company reported third quarter net income of $1.3 million, or $0.07 per share, an increase of 146% and 133% respectively, as compared to the $0.5 million, or $0.03 per share, in the third quarter of fiscal 2019.

Geoffrey Hedrick, Chairman and Chief Executive Officer of IS&S, said, “The necessary and prudent actions we implemented early on to reduce the impact of the pandemic have once again led to a strong performance. Revenues increased 30% in the third quarter as compared to the prior quarter, and we generated our best quarterly operating income in thirteen quarters and our best nine months operating income in four years. We signed an OEM contract to supply Textron with our ThrustSense® Auto-throttle with LifeGuard™ Protection as standard equipment on all their new King Air 360 turboprops. Textron will also offer Auto-throttle with LifeGuard™ Protection for retrofit at all of its service centers to the thousands of King Airs currently in use. Our financial performance over the last few quarters, as well as the expanding number of new OEM platforms on which IS&S is standard equipment, are strong indicators of the value of our innovative technology. We believe our increased market presence will lead to more profitable growth opportunities and continue to build shareholder value.”

At June 30, 2020, the Company had $23.0 million of cash on hand, as net cash flows from operating activities were $0.6 million over the first nine months of the year. New orders in the third quarter of fiscal 2020 were approximately $2.7 million, and backlog as of June 30, 2020 was $6.5 million. Backlog excludes potential future sole-source production orders from the Pilatus PC-24, KC-46A and the Textron King Air 360 all of which are currently in production. The Company expects these programs to remain in production for multiple years and that these contracts will add to production sales already in backlog.

Nine Months Results

Total sales for the nine months ended June 30, 2020, were $15.3 million, up 20% from $12.8 million for the nine months ended June 30, 2019. For the nine months ended June 30, 2020, the company reported net income of $2.0 million, or $0.12 per share, an increase of 137% and 140% respectively, as compared to the $0.9 million, or $0.05 per share, for the first nine months of fiscal 2019.

Conference Call

The Company will be hosting a conference call on Thursday, August 6, 2020, at 10:00 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,

 

2020

 

 

2019

 

(unaudited)
ASSETS
Current assets
Cash and cash equivalents

 $

22,984,249

 

 $

22,416,830

 

Accounts receivable

 

     3,864,656

 

 

     2,348,537

 

Contract asset

 

                 -

 

 

          80,182

 

Inventories

 

     4,709,342

 

 

     4,470,694

 

Prepaid expenses and other current assets

 

     1,107,723

 

 

        642,049

 

   
Total current assets

 

32,665,970

 

 

29,958,292

 

 
 Property and equipment, net

 

8,225,732

 

 

     8,444,692

 

 Other assets

 

205,276

 

 

        154,041

 

   
Total assets

 $

41,096,978

 

 $

38,557,025

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
Accounts payable

 $

     949,080

 

 $

  1,079,073

 

Accrued expenses

 

1,506,790

 

 

     1,110,918

 

Contract liability

 

106,341

 

 

          29,231

 

   
Total current liabilities

 

2,562,211

 

 

2,219,222

 

 
Non-current deferred income taxes

 

129,689

 

 

        129,651

 

Other liabilities

 

            2,241

 

 

                   -

 

Total liabilities

 

2,694,141

 

 

2,348,873

 

 
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, 2020 and September 30, 2019

 $

                -

 

 $

                -

 

 
Common stock, $.001 par value:  75,000,000 shares authorized, 19,080,877 and 19,005,487
issued at June 30, 2020 and September 30, 2019, respectively

 

          19,081

 

 

          19,006

 

 
Additional paid-in capital

 

   52,155,835

 

 

   51,987,096

 

Retained earnings

 

7,596,458

 

 

5,570,587

 

Treasury stock, at cost, 2,096,451 shares at June 30, 2020 and 
September 30, 2019

 

(21,368,537

)

 

(21,368,537

)

   
Total shareholders' equity

 

   38,402,837

 

 

   36,208,152

 

   
Total liabilities and shareholders' equity

 $

41,096,978

 

 $

38,557,025

 

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

 

 

 

 

2020

 

2019

 

2020

 

2019

 
Net Sales

        5,953,689

        4,589,824

 15,300,182

      12,770,601

 
Cost of sales

        2,559,016

        2,064,617

   7,008,691

        5,733,385

 
Gross profit

        3,394,673

        2,525,207

   8,291,491

        7,037,216

 
Operating expenses:
Research and development

           870,805

           722,525

   2,249,439

        1,967,379

Selling, general and administrative

        1,279,422

        1,416,053

   4,514,085

        4,414,126

Total operating expenses

        2,150,227

        2,138,578

   6,763,524

        6,381,505

 
Operating income

        1,244,446

           386,629

   1,527,967

           655,711

 
Interest income

               7,767

             99,916

      152,358

           147,948

Other income

             16,261

             24,714

        44,760

             57,314

Income before income taxes

        1,268,474

           511,259

   1,725,085

           860,973

 
Income tax expense (benefit)

               8,616

                      -

    (300,786)

               7,794

 
Net income

 $     1,259,858

 $        511,259

 $2,025,871

 $        853,179

 
Net income per common share:
Basic

 $              0.07

 $              0.03

 $         0.12

 $              0.05

Diluted

 $              0.07

 $              0.03

 $         0.12

 $              0.05

 
Weighted average shares outstanding:
Basic

      16,952,973

      16,880,341

 16,931,049

      16,860,503

Diluted

      17,087,275

      16,978,643

 17,097,414

      16,898,321

 


Contacts

Investor Relations:
Relland Winand
610-646-0350