Innovative Solutions & Support, Inc. (“IS&S” or the
“Company”) (NASDAQ: ISSC) today announced its financial results for
the third quarter of fiscal 2017 ended June 30, 2017.
For the third quarter of fiscal 2017, the Company reported net
sales of $4.5 million, compared to third quarter fiscal 2016 net
sales of $6.5 million. Gross margins in the third quarter were 52%
compared to 60% in the third quarter of fiscal 2016. The Company
reported net income of $19,000, or approximately $0.00 per fully
diluted share, for the third quarter of 2017 compared to net income
of $227,000, or $0.01 per fully diluted share, for the third
quarter of 2016.
Geoffrey Hedrick, Chairman and Chief Executive Officer of
IS&S, said, “Sales in the third quarter were consistent with
the previous quarter, with a concentration of revenues generated
from more profitable product sales resulting in an increase to
gross margin compared to the second fiscal quarter. More
importantly, we continued to implement our strategy to expand our
product portfolio and grow our distribution network. We are
partnering with Blackhawk Modifications, Inc. (Blackhawk) as a
distributor and installation center for our NextGen Flight Deck and
Integrated Turboprop Autothrottle for the King Air 200 and 350
platforms. We’ll be working with Blackhawk for flight testing and
product certification and expect to receive a Supplemental Type
Certification (STC) for the Autothrottle on these platforms in the
next few months. In June, the FAA issued to IS&S the first STC
for a Turboprop Autothrottle, (Patent Pending Design) for the
PC-12. We believe based on conversations with aviation experts and
partners that this first-of-its-kind technology should open a
market that features at least twenty-five different aircraft types
and over 10,000 individual aircraft opportunities. We plan to
leverage the innovative functionality of the Autothrottle to add
additional value to our NextGen Flight Deck."
At June 30, 2017, the Company had $25.0 million of cash on hand,
an increase of $6.2 million compared to September 30, 2016, our
last fiscal year end.
New orders in the third quarter of fiscal 2017 were $3.0 million
and backlog, as of June 30, 2017, was $4.3 million. Backlog
excludes potential future sole-source production orders from
products developed under the Company’s Pilatus PC-24 and Boeing
KC-46A engineering development contracts, both of which the Company
expects to remain in production for more than a decade. The Company
expects that these contracts will add to their production sales
already in backlog.
Shahram Askarpour, President of IS&S, added, "This has been
a year of significant commitment to new product development and
distribution network expansion. Research and development expenses
were 27% of revenues through the first three quarters of this year
as we continue to invest in internal development of new products
that can address broader markets, not just individual
manufacturers. Already this year, we have been awarded two STCs
that we believe will position us for meaningful growth
opportunities. In addition, we’ve increased our efforts to build
out our global MRO distribution network. By continually expanding
our product portfolio and enhancing our global distribution
network, we are striving to increase our addressable market and
strengthen the value of our franchise for shareholders.”
Nine Months Results
Total net sales for the nine months ended June 30, 2017 were
$12.6 million compared to $21.7 million for the first nine months
of fiscal 2016. Gross margin for the first nine months of fiscal
2017 was 50% compared to 60%(1) in the year ago period. Net income
for the nine months ended June 30, 2017 was $4.8 million, or $0.28
per fully diluted share, compared to $1.6 million(1), or $0.09 per
fully diluted share(1), over the first three quarters of fiscal
2016. In the second quarter of 2017, as a result the settlement of
the Delta Airlines, Inc. (“Delta”) lawsuit, the Company recognized
$4.1 million of other income.
______________________________
(1) In January 2016, the Company renegotiated an agreement with
a customer whereby $1.3 million of unbilled receivables and our
obligations associated with certain product levels were canceled.
The bad debt expense related to the impairment of the unbilled
receivable was previously recognized in the Company's September 30,
2015 audited financial statements. In addition, as a result of the
changes to the agreement, we recognized an approximately $1.2
million positive impact to the statement of operations in the
second quarter of fiscal 2016 resulting from a reversal of $1.2
million in associated liabilities consisting of deferred revenue
and a contract loss accrual.
Conference Call
The Company will be hosting a conference call on Thursday,
August 10, 2017 at 10:00 a.m. ET to discuss these results and
its business outlook. Please use the following dial in number to
register your name and company affiliation for the conference
call: 877-883-0383 and enter the PIN Number 0725903. 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) 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, 2017 2016 (unaudited)
ASSETS
Current assets Cash and cash equivalents $ 24,981,341 $ 18,767,661
Accounts receivable 2,073,268 4,511,091 Unbilled receivables, net
1,600,034 1,597,672 Inventories 4,533,039 3,645,828 Prepaid
expenses and other current assets 1,002,622 847,207
Total current assets 34,190,304
29,369,459 Property and equipment, net 6,762,897 6,962,562
Other assets 200,274 156,948
Total assets $ 41,153,475 $ 36,488,969
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $ 1,021,572 $ 1,503,771
Accrued expenses 1,955,031 1,889,908 Deferred revenue 314,702
179,585 Total current
liabilities 3,291,305 3,573,264 Non-current deferred income
taxes 67,745 67,701 Total
liabilities 3,359,050 3,640,965
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, 2017 and September 30, 2016
$ - $ -
Common stock, $.001 par value: 75,000,000
shares authorized, 18,879,580 and 18,812,465 issued at June 30,
2017 and September 30, 2016
18,880 18,813 Additional paid-in capital 51,583,840
51,392,159 Retained earnings 7,560,242 2,805,569
Treasury stock, at cost, 2,096,451 shares
at June 30, 2017 and September 30, 2016
(21,368,537 ) (21,368,537 )
Total shareholders' equity 37,794,425 32,848,004
Total liabilities and
shareholders' equity $ 41,153,475 $ 36,488,969
Innovative Solutions and Support, Inc.
Consolidated Statements of Operations (unaudited)
Three months ended Nine months ended June 30, June 30, 2017 2016
2017 2016 Gross sales $ 4,541,421 $ 6,504,592 $ 13,117,200 $
21,749,152 Returns and allowances - -
(556,009 ) - Net Sales 4,541,421 6,504,592 12,561,191
21,749,152 Cost of sales 2,164,140
2,621,016 6,294,623 8,646,419 Gross
profit 2,377,281 3,883,576 6,266,568 13,102,733 Operating
expenses: Research and development 1,236,184 1,405,158 3,391,181
3,674,374 Selling, general and administrative 1,682,286
2,246,074 2,025,952 7,531,633
Total operating expenses 2,918,470 3,651,232 5,417,133 11,206,007
Operating (loss) income (541,189 ) 232,344 849,435 1,896,726
Interest income 7,682 9,092 27,505 24,458 Other income
15,628 12,457 4,174,953
71,490 (Loss) income before income taxes (517,879 ) 253,893
5,051,893 1,992,674 Income tax (benefit) expense
(537,099 ) 27,096 297,220 403,002
Net income $ 19,220 $ 226,797 $ 4,754,673 $
1,589,672 Net income per common share: Basic $ 0.00 $
0.01 $ 0.28 $ 0.09 Diluted $ 0.00 $ 0.01 $ 0.28
$ 0.09 Weighted average shares outstanding: Basic
16,755,082
16,941,707 16,735,533
16,925,688 Diluted
16,870,404 17,059,546
16,847,305
17,027,216
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version on businesswire.com: http://www.businesswire.com/news/home/20170809006033/en/
Innovative Solutions & Support, Inc.Relland WinandChief
Financial Officer610-646-0350rwinand@innovative-ss.com
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