Innovative Solutions & Support, Inc. (“IS&S” or the
“Company”) (ISSC) today announced its financial results for the
second quarter of fiscal 2017 ended March 31, 2017.
For the second quarter of fiscal 2017, the Company reported net
sales of $4.7 million, compared to second quarter fiscal 2016 net
sales of $8.7 million. In the second quarter of 2017, as a result
of the previously announced settlement of the lawsuit with Delta
Airlines, Inc. (“Delta”), the Company recognized $4.1 million of
other income. During the term of the litigation, expenses incurred
by the Company were recognized as a component of operating
expenses. Furthermore, selling, general and administrative expenses
for the quarter ended March 31, 2017 include the reversal of a $3.6
million reserve for an unbilled receivable, representing the
balance of the $7.75 million the Company received in settlement of
this lawsuit. The Company reported net income of $5.9 million, or
$0.35 per fully diluted share, for the second quarter of 2017
compared to net income of $1.6 million, or $0.09 per fully diluted
share in the second quarter a year ago. In the year ago quarter,
the Company recognized a $1.2 million benefit when it reversed
deferred revenue and a contract loss accrual as the result of a
contract renegotiation.(1)
Geoffrey Hedrick, Chairman and Chief Executive Officer of
IS&S, said, “We are pleased with the $7.75 million settlement
and the end of the distraction of the lawsuit with Delta. We
obtained a Federal Aviation Administration (FAA) Supplemental Type
Certification (STC) and delivered the first of our PC12 flight
deck, further expanding our product portfolio. We contracted with
one of the world’s leading MROs, Lufthansa Technik, dramatically
expanding our worldwide distribution network. These are both strong
contributors to our future growth. The new STC’d PC-12 NextGen
Flight Deck, is fully integrated with our Turbo Prop Autothrottle.
This is a first of its kind a product for which we have an STC
pending, and for which there are strong growth expectations. We
believe the steady progress we are achieving is further solidifying
our ability to provide the best price-for-performance solutions to
the impending demands from the implementation of NextGen
mandates.”
At March 31, 2017, the Company had $23.7 million of cash on
hand, an increase of $5.5 million over the prior quarter.
New orders in the second quarter of fiscal 2017 were $4.6
million and backlog, as of March 31, 2017, was $5.9 million,
essentially unchanged from the end of the first quarter. Backlog
excludes potential future sole-source production orders from
products in development under the Company’s engineering development
contracts, including the Eclipse 550, the Pilatus PC-24, and the
KC-46A, all of which the Company expects to remain in production
for more than decade following completion of their respective
development phases. The Company expects that these contracts will
add to production sales already in backlog.
Shahram Askarpour, President of IS&S, added, "Product sales
increased over the first quarter, from which we generated margins
of 52 percent. Our agreement with Lufthansa Technik will enable
owners and operators to purchase and have installed our Cockpit/IP®
Flat Panel Display System (FPDS) for Classic Series Boeing 737 and
757/767 and its Integrated Standby Unit at all of their global
locations. The IS&S retrofit is being offered on a global basis
at all of Lufthansa Technik’s 35 subsidiaries and affiliates and is
already in service on over 320 Boeing 757/767 aircraft. We also
continue to internally fund research and development to develop new
products. Together with our new MRO agreement, the STC for the
Pilatus PC-12 NextGen Flight Deck and a PC-12 Auto-throttle STC
pending we are making steady progress with our strategy to
establish a broad product portfolio on a global platform that is
responsive to the demand expected to arise from impending NextGen
mandates. By capitalizing on this large and growing market, we can
build value for our shareholders.”
Six Months Results
Total net sales for the six months ended March 31, 2017 were
$8.0 million, compared to $15.2 million for the six months ended
March 31, 2016. Net income for the six months ended March 31, 2017
was $4.7 million, or $0.28 per fully diluted share compared to $1.4
million, or $0.08 per fully diluted share for the first half of
fiscal 2016. Six month results for both fiscal 2017 and 2016
include the non-recurring items recognized in their respective
second quarters; the settled lawsuit with Delta of $7.75 million
and the $1.2 million benefit when the Company reversed deferred
revenue and a contract loss accrual as the result of a contract
negotiation.
______________________________________
(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, May
11, 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 1995355. 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 Statements of Operations
(unaudited) Three months ended Six months ended March
31, March 31, 2017 2016 2017 2016 Gross sales $ 4,751,731 $
8,660,982 $ 8,575,778 $ 15,244,561 Returns and allowances
(97,829 ) - (556,009 ) - Net Sales 4,653,902
8,660,982 8,019,769 15,244,561 Cost of sales
2,302,431 2,757,635 4,130,483
6,025,403 Gross profit 2,351,471 5,903,347 3,889,286
9,219,158 Operating expenses: Research and development
1,069,009 1,337,616 2,154,997 2,269,216 Selling, general and
administrative (1,703,456 ) 2,592,615 343,666
5,285,559 Total operating expenses (634,447 )
3,930,231 2,498,663 7,554,775 Operating income 2,985,918
1,973,116 1,390,623 1,664,383 Interest income 9,947 8,340
19,823 15,366 Other income 4,140,210 26,623
4,159,326 59,032 Income before income taxes
7,136,075 2,008,079 5,569,772 1,738,781 Income tax expense
1,205,650 429,766 834,319
375,906 Net income $ 5,930,425 $ 1,578,313 $
4,735,453 $ 1,362,875 Net income per common share:
Basic $ 0.35 $ 0.09 $ 0.28 $ 0.08 Diluted $ 0.35
$ 0.09 $ 0.28 $ 0.08 Weighted average shares
outstanding: Basic
16,735,503
16,925,719 16,725,759
16,917,679 Diluted
16,847,059 17,018,161
16,835,756
17,009,299 Innovative
Solutions and Support, Inc. Consolidated Balance Sheets
March 31,
September 30,
2017
2016 (unaudited)
ASSETS
Current assets Cash and cash equivalents $ 23,692,869 $ 18,767,661
Accounts receivable, net 4,122,480 4,511,091 Unbilled receivables,
net 1,625,729 1,597,672 Inventories 4,331,607 3,645,828 Prepaid
expenses and other current assets 868,128 847,207
Total current assets 34,640,813 29,369,459 Property
and equipment, net 6,823,522 6,962,562 Other assets 154,548 156,948
Total assets $ 41,618,883 $ 36,488,969
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $ 1,344,368 $ 1,503,771
Accrued expenses 2,099,044 1,889,908 Deferred revenue 332,551
179,585 Total current liabilities 3,775,963 3,573,264
Non-current deferred income taxes 67,715 67,701
Total liabilities 3,843,678 3,640,965
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
March 31, 2017 and September 30, 2016
$ - $ -
Common stock, $.001 par value: 75,000,000
shares authorized, 18,879,580 and 18,812,465 issued at March 31,
2017 and September 30, 2016
18,880 18,813 Additional paid-in capital 51,583,840
51,392,159 Retained earnings 7,541,022 2,805,569
Treasury stock, at cost, 2,096,451 shares
at March 31, 2017 and September 30, 2016
(21,368,537 ) (21,368,537 ) Total shareholders'
equity 37,775,205 32,848,004 Total liabilities and
shareholders' equity $ 41,618,883 $ 36,488,969
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version on businesswire.com: http://www.businesswire.com/news/home/20170510006575/en/
Innovative Solutions & Support, Inc.Relland WinandChief
Financial Officer610-646-0350rwinand@innovative-ss.com
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