Innovative Solutions & Support, Inc. Announces Fourth Quarter and Full Year Fiscal 2022 Financial Results

Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the fourth quarter and full fiscal year 2022 ended September 30, 2022.

For the fourth quarter of fiscal 2022, IS&S reported net sales of $7.3 million, up 5.7% as compared to $6.9 million in the fourth quarter a year ago. The Company reported net income of $1.6 million, or $0.09 per share, an increase of 2.9% compared to $1.5 million, in the fourth quarter of fiscal 2021. IS&S recorded tax expense in the fourth quarter of fiscal 2022 of $0.7 million, compared to $0.4 million in the fourth quarter of fiscal 2021.

Shahram Askarpour, Chief Executive Officer of IS&S, said, “The fourth quarter was another solid quarter of growth in revenue and profitability. Revenue and earnings were up for the fourth consecutive year, driven by top-line growth and an increase in operating leverage. Total cash flows more than doubled for the second consecutive year. We are well positioned to accelerate our revenue and earnings growth and take advantage of organic and inorganic opportunities to generate strong returns for our internal and external stakeholders.”

The Company’s cash on hand increased to $17.3 million as of September 30, 2022, with net cash flows of $2.5 million from investing activities in the fourth quarter due to the sale of a PC-12 airplane. IS&S generated $6.1 million of cash flows from operating activities for the full fiscal year 2022. The Company continues to maintain its strong financial condition and flexibility with significant liquidity and no debt.

New orders in the fourth quarter of fiscal 2022 were approximately $6.5 million and backlog as of September 30, 2022 was $11.8 million. 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 believes that they will continue to add to production sales already included in the backlog.

Full Year Fiscal 2022 Results

Total sales for the fiscal year ended September 30, 2022, were $27.7 million up 20.4% compared to $23.0 million for the fiscal year ended September 30, 2021. Operating income of $6.0 million was up 54.5% from $3.9 million in fiscal 2021. Net income for fiscal 2022 was $5.5 million, or $0.32 per share, compared to $5.1 million, or $0.29 per share, in fiscal 2021. Net income in fiscal 2022 included a $1.1 million gain on the sale of an asset. The gain was mostly offset by increased general & administrative expenses of approximately $1.0 million incurred throughout the year due to higher legal and professional fees related to the passing of former Chairman and CEO Geoffrey Hedrick, changes in the Board of Directors, the hiring of a new CFO, and other legal fees associated with the filing of the S-3 Shelf Registration and Rights Plan. In fiscal 2021, net income was aided by a $1.1 million tax benefit from the release of deferred tax valuation allowances in the third quarter. The tax benefit led to a net income differential of $2.9 million from 2021 to 2022, reflecting the tax expense of $1.8 million in 2022 compared to the $1.1 million tax benefit in 2021.

Conference Call

The Company will be hosting a conference call today, Wednesday, December 14, 2022, at 4:30 p.m. ET to discuss these results and the Company’s business outlook and product development. Participants may access the call by calling 1-877-451-6152 or 1-201-389-0879, and requesting to join the Innovative Solutions & Support, Inc. earnings call. A live webcast will be also be available at https://innovative-ss.com/investor-relations/events-presentations/.

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.

Consolidated Statements of Operations

(unaudited)

 

For the Fiscal Quarter Ended September 30,

For the Fiscal Year Ended September 30,

Net sales:

2022

 

2021

 

2022

 

2021

Product

 

7,000,379

 

6,873,116

$

27,279,750

$

22,760,083

 

Engineering development contracts

 

262,742

 

460,945

 

284,713

 

Total net sales

 

7,263,121

 

6,873,116

 

27,740,695

 

23,044,796

 

 
Cost of sales:
Product

 

2,651,817

 

2,914,802

 

10,905,799

 

10,185,510

 

Engineering development contracts

 

143,768

 

160,515

 

77,656

 

Total cost of sales

 

2,795,585

 

2,914,802

 

11,066,314

 

10,263,166

 

 
Gross profit

 

4,467,536

 

3,958,314

 

16,674,381

 

12,781,630

 

 
Operating expenses:
Research and development

 

642,203

 

686,172

 

2,705,140

 

2,622,919

 

Selling, general and administrative

 

1,527,900

 

1,410,322

 

6,753,915

 

6,257,732

 

Total operating expenses

 

2,170,103

 

2,096,494

 

9,459,055

 

8,880,651

 

 
Operating income

 

2,297,433

 

1,861,820

 

7,215,326

 

3,900,979

 

 
Interest income

 

65,232

 

23,912

 

61,051

 

1,234

 

Other income

 

50,179

 

96

 

65,232

 

74,906

 

Income before income taxes

 

2,412,844

 

1,885,828

 

7,341,609

 

3,977,119

 

 
Income tax (benefit) expense

 

761,468

 

355,569

 

1,817,831

 

(1,087,783

)

 
Net income

 

1,651,376

 

1,530,259

$

5,523,778

$

5,064,902

 

 
Net income per common share:
Basic

$

0.10

$

0.09

$

0.32

$

0.29

 

Diluted

$

0.10

$

0.09

$

0.32

$

0.29

 

 
Weighted average shares outstanding:
Basic

 

17,256,750

 

17,225,423

 

17,256,750

 

17,225,423

 

Diluted

 

17,257,871

 

17,226,620

 

17,257,871

 

17,226,620

 

 

Innovative Solutions and Support, Inc.

Consolidated Balance Sheets

(unaudited)

 
September 30, September 30,

 

2022

 

 

2021

 

ASSETS
Current assets
Cash and cash equivalents

$

17,250,546

 

$

8,265,606

 

Accounts receivable

 

4,297,457

 

 

4,046,337

 

Contract asset

 

162,742

 

 

-

 

Inventories

 

5,349,104

 

 

4,545,392

 

Prepaid expenses and other current assets

 

1,142,470

 

 

833,076

 

 
Total current assets

 

28,202,319

 

 

17,690,411

 

 
Property and equipment, net

 

6,292,189

 

 

8,143,483

 

Deferred income taxes

 

46,487

 

 

1,063,822

 

Other assets

 

164,328

 

 

188,284

 

 
Total assets

$

34,705,323

 

$

27,086,000

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities
Accounts payable

$

708,845

 

$

623,620

 

Accrued expenses

 

2,972,275

 

 

1,431,115

 

Contract liability

 

135,686

 

 

61,330

 

Contract liability - related party

 

123,497

 

 

356,174

 

 
Total current liabilities

 

3,940,303

 

 

2,472,239

 

 
Other liabilities

 

15,065

 

 

28,680

 

 
Total liabilities

 

3,955,368

 

 

2,500,919

 

 
 
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 September 30, 2022 and 2021

 

-

 

 

-

 

 
Common stock, $.001 par value: 75,000,000 shares authorized, 19,412,664 and
19,342,823 issued at September 30, 2022 and 2021, respectively

 

19,413

 

 

19,343

 

 
Additional paid-in capital

 

52,458,121

 

 

51,817,095

 

Accumulated deficit

 

(359,042

)

 

(5,882,820

)

Treasury stock, at cost, 2,096,451 shares at September 30, 2022 and at
September 30, 2021

 

(21,368,537

)

 

(21,368,537

)

 
Total shareholders' equity

 

30,749,955

 

 

24,585,081

 

 
Total liabilities and shareholders' equity

$

34,705,323

 

$

27,086,000

 

 

Innovative Solutions and Support, Inc.

Consolidated Statements of Cash Flows

(unaudited)

 
For the Fiscal Year Ended September 30,

 

2022

 

 

 

2021

 

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

5,523,778

 

$

5,064,902

 

$

3,269,783

 

Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization

 

368,499

 

 

432,176

 

 

433,510

 

Share-based compensation expense
Stock options

 

166,617

 

 

181,350

 

 

17,337

 

Stock awards

 

173,325

 

 

159,980

 

 

160,006

 

Gain on disposal of property and equipment

 

(1,191,743

)

 

-

 

 

-

 

Excess and obsolete inventory cost

 

-

 

 

(100,446

)

 

66,511

 

Deferred income taxes

 

1,017,335

 

 

(1,193,511

)

 

38

 

(Increase) decrease in:
Accounts receivable

 

(251,120

)

 

322,774

 

 

(2,020,574

)

Contract asset

 

(162,742

)

 

-

 

 

80,182

 

Inventories

 

(708,859

)

 

(153,611

)

 

112,848

 

Prepaid expenses and other current assets

 

(309,394

)

 

(157,967

)

 

(33,060

)

Other non-current assets

 

-

 

 

-

 

 

(96,269

)

Increase (decrease) in:
Accounts payable

 

85,224

 

 

(167,272

)

 

(288,181

)

Accrued expenses

 

1,272,826

 

 

(4,655

)

 

207,568

 

Income taxes

 

269,015

 

 

104,640

 

 

(1,666

)

Contract liability

 

74,356

 

 

(242,835

)

 

284,684

 

Contract liability - related party

 

(232,677

)

 

346,974

 

 

(550

)

Net cash provided by operating activities

 

6,094,440

 

 

4,592,499

 

 

2,192,167

 

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment

 

(161,230

)

 

(340,678

)

 

(118,797

)

Proceeds from the sale of property and equipment

 

2,750,576

 

 

-

 

 

-

 

Net cash provided by (used in) investing activities

 

2,589,346

 

 

(340,678

)

 

(118,797

)

 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from paycheck protection program

 

-

 

 

-

 

 

1,203,900

 

Repayment of paycheck protection program

 

-

 

 

-

 

 

(1,203,900

)

Proceeds from exercise of stock options

 

301,154

 

 

17,010

 

 

175,143

 

Tax withholding related to cashless exercise of stock options

 

-

 

 

-

 

 

(880,476

)

Dividend paid

 

-

 

 

(19,788,092

)

 

-

 

Net cash provided by (used in) financing activities

 

301,154

 

 

(19,771,082

)

 

(705,333

)

 
Net increase (decrease) in cash and cash equivalents and restricted cash

 

8,984,940

 

 

(15,519,261

)

 

1,368,037

 

Cash and cash equivalents and restricted cash, beginning of year

 

8,265,606

 

 

23,784,867

 

 

22,416,830

 

 
Cash and cash equivalents and restricted cash, end of year

$

17,250,546

 

$

8,265,606

 

$

23,784,867

 

 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes

$

531,481

 

$

1,089

 

$

2,456

 

Cash received from income tax refund

 

-

 

 

-

 

 

309,712

 

 
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION
Cashless exercise of stock options

 

-

 

 

-

 

 

1,635,000

 

Accrual of dividends payable

 

-

 

 

-

 

 

11,180,900

 

 

 

Contacts

Mike Linacre, Chief Financial Officer

Innovative Solutions & Support, Inc.

610-646-0350



Press:

Jason Zywalewski

+1 610.646.9800 x 609

jzywalewski@innovative-ss.com

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