Innovative Solutions & Support, Inc. (“IS&S” or the
“Company”) (ISSC) today announced its financial results for the
first quarter of fiscal 2015 ended December 31, 2014.
For the first quarter, the Company reported sales of $6.7
million, compared to first quarter fiscal 2014 sales of $11.1
million. The Company reported first quarter 2015 net income of
$594,000, or $0.03 per share, compared to net income of $1 million,
or $0.06 per share, in the same quarter a year ago. In the first
quarter of fiscal 2015 the Company recorded a $411,000 tax benefit
due to the retroactive reinstatement of the R&D tax credit
effective January 1, 2014.
Geoffrey Hedrick, Chairman and Chief Executive Officer of
IS&S, said, “I am pleased to report a profitable first quarter,
which has us on course for another year of positive earnings,
although future quarterly results may be variable as they are
dependent upon the timing and extent of receipt of customer sales
orders. Gross margins in the quarter reflect the anticipated
decrease in engineering and development revenue from programs that
effectively contributed breakeven or negative margins. We've
adjusted the organization to be in line with historical as well as
current engineering requirements, production demands and with
opportunities to penetrate the market with our growing portfolio of
existing products, including the recently certified B737 Flight
Management System. In addition to our ongoing efforts to build
backlog through longer term contracts, in the near term we are
experiencing demand for smaller, intra-quarter book and ship
production orders of our existing products that generate attractive
margins, although they are not reflected in reported backlog. The
Company has developed a growing portfolio of products that offer
some of the industry’s most cost effective solutions. The Company
believes that this portfolio of products will lead to significant
future orders.”
New orders in the first quarter of fiscal 2015 were $4.1
million. Backlog was $5.8 million at December 31, 2014. Backlog
reflects firm orders with stipulated delivery schedules, and
excludes potential future sole-source production orders, including
the Eclipse E550, the Pilatus PC-24, and the KC-46A aircraft.
At December 31, 2014, the Company had $14.2 million of cash on
hand, down from cash of $15.2 million at September 30, 2014. Cash
used in operating activities was $726,000 in the quarter, primarily
due to a $1.8 million reduction in accruals and payments of
accounts payable. Cash balances also reflect the use of $254,000 to
repurchase shares during the quarter.
Shahram Askarpour, President of IS&S, added, "We’ve quickly
adapted to current opportunities and challenges, with a leaner
organization, an increased emphasis on marketing our broad
portfolio of best price-for-performance solutions, and further
advancing current engineering programs, such as the Pilatus
utilities management system, towards production status. The
resources that were being consumed by a single large engineering
program are now pursuing multiple attractive new program
opportunities. However, we recognize that large contracts for major
fleet upgrades tend to move slowly. So, we are expanding our
intra-quarter book and ship business, which leverages our existing,
on-the-shelf product portfolio and generates more immediate
revenue. Operating from what essentially represents a new base, we
believe we can strategically capitalize on our value proposition
against a backdrop of a generally improving market for our
products."
Conference Call
The Company will be hosting a conference call January 22, 2015
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 8943980. 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 (OEM’s) 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 December 31,
September 30, 2014 2014 (unaudited)
ASSETS
Current assets Cash and cash equivalents $ 14,208,649 $ 15,214,584
Accounts receivable 4,558,471 4,419,863 Unbilled receivables, net
6,837,668 7,425,728 Inventories 5,276,149 5,470,786 Deferred income
taxes 2,959,436 3,245,223 Prepaid expenses and other current assets
794,466 750,108 Total current
assets 34,634,839 36,526,292 Property and equipment, net
7,367,469 7,467,663 Non-current deferred income taxes 774,764
57,707 Other assets 106,048 110,848
Total assets $ 42,883,120 $ 44,162,510
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $ 1,670,668 $ 2,402,652
Accrued expenses 2,907,095 4,077,290 Deferred revenue
596,639 526,320 Total current
liabilities 5,174,402 7,006,262 Deferred income taxes
133,116 132,999 Other liabilities 11,814
11,725 Total liabilities 5,319,332
7,150,986 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
December 31, 2014 and September 30, 2014
- -
Common stock, $.001 par value: 75,000,000
shares authorized, 18,736,089 and 18,714,449 issued at December 31,
2014 and September 30, 2014, respectively
18,736 18,715 Additional paid-in capital 50,910,168
50,697,497 Retained earnings 7,278,646 6,684,902
Treasury stock, at cost, 1,846,451 shares
at December 31, 2014 and 1,756,807 at September 30, 2014
(20,643,762 ) (20,389,590 ) Total
shareholders' equity 37,563,788 37,011,524
Total liabilities and shareholders' equity $
42,883,120 $ 44,162,510
Innovative
Solutions and Support, Inc. Consolidated Statements of
Income (unaudited) Three months ended
December 31, 2014 2013 Sales $ 6,724,255 $ 11,105,811
Cost of sales 3,962,450 7,325,375 Gross
profit 2,761,805 3,780,436 Operating expenses: Research and
development 654,999 626,921 Selling, general and administrative
1,940,491 1,744,891 Total operating expenses
2,595,490 2,371,812 Operating income 166,315 1,408,624
Interest income 5,885 10,467 Other income 10,822
5,666 Income before income taxes 183,022 1,424,757
Income tax expense (benefit) (410,720 )
416,161 Net income $ 593,742 $ 1,008,596 Net
income per common share: Basic $ 0.04 $ 0.06 Diluted $ 0.03
$ 0.06 Weighted average shares outstanding: Basic
16,955,726
16,888,086 Diluted
17,040,681
17,094,346
Innovative Solutions & Support, Inc.Relland Winand,
610-646-0350Chief Financial Officerrwinand@innovative-ss.com
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