Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today
announced its financial results for the second quarter of fiscal
2011 ended March 31, 2011.
Net revenues for the second quarter of fiscal 2011 were $6.7
million, up 26% from $5.4 million in the year ago quarter. The
Company reported fiscal 2011 second quarter net income of $499,000,
or $0.03 per diluted share, up from a loss of ($746,000), or
($0.04) per diluted share, in the second quarter of last year. The
Company also generated $600,000 of cash flow from operating
activities in the second quarter. Second quarter 2011 revenues and
earnings are up sequentially compared to first quarter 2011
revenues of $6.5 million and earnings of $0.02 per diluted
share.
Geoffrey Hedrick, Chairman and Chief Executive Officer of
Innovative Solutions & Support, Inc., said, “Our improved
financial performance reflects the success we have achieved in
enhancing the value our products deliver to the markets. For the
quarter, gross margins improved compared to last year’s second
quarter, driven by productivity and efficiency improvements. We are
pleased that the quarter’s earnings growth was achieved while we
were increasing our investment in new product research and
development to the highest level in two years, $1.6 million. We
believe that this strategy builds value for shareholders by
broadening our product offering and expanding the number and type
of aircraft we serve.”
At March 31, 2011 the Company had $42.5 million of cash on hand,
no long-term debt and a backlog of approximately $25 million. The
Company noted that the decrease in backlog coincided with an
increase in the value of outstanding proposals, in excess of $100
million, primarily due to unusually long delays being experienced
between proposals and contract awards, especially in the military
market where the effect of the federal budget impasse has been
particularly acute.
Six Month Results
Revenues for the six months ended March 31, 2011 were $13.3
million compared to $10.0 million for the six months ended March
31, 2010. For the six months ended March 31, 2011, net income was
$784,000, or $0.05 per diluted share, compared to a net loss of
($1.9) million, or ($0.11) per diluted share, for the first half of
last fiscal year. Cash flow from operating activities for the first
half of the year was $1.6 million compared to $0.3 million for the
same period in 2010.
Roman Ptakowski, President of ISSC, added, “Innovative Solutions
& Support’s Cockpit/IP continues to be recognized as the best
value in the industry. This quarter our Flight Management System
and GPS receiver for the Eclipse Twin-Jet received FAA
certification. The resulting avionics suite on the E500 is now one
of the most advanced cockpits available on any aircraft and has
been well received by Eclipse operators. This is a demonstration of
our ability to develop new technologies that cost-effectively
enhance the safety, reliability and performance of aircraft.”
Business Outlook
The U.S. Federal budget stalemate has deferred military orders;
however, we are beginning to see an increase in activity now that
the budget has been resolved. Higher fuel prices have caused us
concern that they may affect the timing of airline discretionary
spending decisions. We are working to minimize the timing effect of
these unforeseen delays. We now anticipate financial performance in
the second half of fiscal year 2011 to be similar to the first half
of this year. We will provide additional commentary on the balance
of the fiscal year during our earnings conference call.
The Company will be hosting a conference call Thursday, April
28, 2011 at 10:00 a.m. EDT time 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:
800-946-0706. The conference ID# is 1023062. 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 engaged in the
design, manufacture and marketing of Flat Panel Display Systems,
Air Data equipment, Flight Information Computers, Engine and Fuel
Measurement and Control Computers, and advanced monitoring systems
that measure and display critical flight information. This includes
data relative to aircraft separation, airspeed and altitude as well
as fuel and critical engine parameters.
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 reflects 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 Statement of Operations
(unaudited) Three months ended Six months
ended March 31 March 31, 2011
2010 2011 2010
Sales $ 6,746,070 $ 5,372,957 13,275,881 9,980,196 Cost of
Sales 2,873,414 2,942,496
5,809,069 5,779,269 Gross Profit
3,872,656 2,430,461 7,466,812 4,200,927 Operating expenses:
Research and development 1,556,827 1,404,705 2,910,434 2,569,410
Selling, general and administrative 1,849,143
1,876,326 3,938,492 4,027,465
Total operating expenses 3,405,970 3,281,031 6,848,926 6,596,875
Operating (loss) income 466,686 (850,570 ) 617,886
(2,395,948 ) Interest income 45,263 27,636 92,855 50,610
Interest expense (404 ) (614 ) (862 ) (1,278 ) Other income
- - 150,003 50,000
(Loss) income before income taxes 511,545 (823,548 ) 859,882
(2,296,616 ) Income tax (benefit) expense 12,393
(77,783 ) 75,950 (405,678 )
Net (loss) income $ 499,152 $ (745,765 ) $ 783,932
$ (1,890,938 ) Net (loss) income per Common Share
Basic $ 0.03 $ (0.04 ) $ 0.05 $ (0.11 ) Diluted $
0.03 $ (0.04 ) $ 0.05 $ (0.11 ) Weighted
Average Shares Outstanding Basic 16,782,684 16,752,563 16,782,684
16,749,080 Diluted 16,838,662 16,752,563 16,829,918 16,749,080
Innovative Solutions and Support, Inc.
Condensed Consolidated Balance Sheet (unaudited)
March 31, September 30, 2011 2010
ASSETS
Current Assets Cash and cash equivalents $ 42,477,085 $ 40,916,346
Accounts receivable, net 2,573,426 2,529,976 Inventories 4,514,475
4,656,392 Deferred income taxes 402,266 522,352 Prepaid expenses
and other current assets 931,512 982,768
Total current assets 50,898,764 49,607,834
Property and equipment, net 7,566,448 7,761,538 Other assets
279,989 221,150 Total Assets $
58,745,201 $ 57,590,522
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities Current portion of capitalized lease
obligations $ 9,908 $ 9,908 Accounts payable 773,445 543,877
Accrued expenses 2,457,548 2,585,060 Deferred revenue
362,298 157,933 Total current
liabilities 3,603,199 3,296,778 Long-term portion of
capitalized lease obligations 9,528 15,560 Deferred revenue - 8,688
Deferred income taxes 530,218 649,929 Other liabilities
171,866 151,530 Total Liabilities
4,314,811 4,122,485 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
March 31, 2011 and September 30, 2010
- -
Common stock, $.001 par value: 75,000,000
shares authorized, 18,265,194 and 18,244,701 issued at March 31,
2011 and September 30, 2010
18,265 18,245 Additional paid-in capital 47,010,047
46,831,646 Retained earnings 26,693,584 25,909,652
Treasury stock, at cost, 1,482,510 and
1,482,510 shares at March 31, 2011 and September 30, 2010,
respectively
(19,291,506 ) (19,291,506 ) Total
Shareholders' Equity 54,430,390 53,468,037
Total Liabilities and Shareholders' Equity $
58,745,201 $ 57,590,522
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