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

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

 

 

 

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