Innovative Solutions & Support, Inc. (NASDAQ:ISSC) today
announced its financial results for the second quarter of fiscal
2015, ended March 31, 2015.
For the second quarter of fiscal 2015, the Company reported
sales of $5.3 million, compared to sales of $12.5 million for the
second quarter of fiscal 2014. The Company reported a second
quarter 2015 net loss of $0.4 million, or $0.02 per share, compared
to second quarter 2014 net income of $0.8 million, or $0.05 per
share.
Geoffrey Hedrick, Chairman and Chief Executive Officer of
Innovative Solutions & Support, Inc. (“ISSC”), said, “Although
the Company reported a loss in the quarter, we generated positive
cash flow and began to see our marketing efforts result in a
pick-up in proposal activity, which we are optimistic should lead
to an increase in new orders consistent with our past
product/marketing cycle experience. Revenues and earnings in the
second quarter reflect the quarterly variability we anticipate this
entire year. We also sustained our commitment to research and
development in the quarter, which, on a relative basis, was double
that of a year ago. Nevertheless, as a result of strong cost
controls and an improvement in margins relative to a year ago,
second quarter performance enabled us to remain profitable over the
first half of the year. It was a quarter of consolidation during
which we streamlined the organization and solidified our foundation
to move forward with an aggressive sales and marketing effort. As
our contractual engineering commitments to individual customers
begin to wind down, we can increasingly shift resources to new
programs that expand our market and leverage our technological
innovation and price-for-performance value proposition.”
At March 31, 2015, the Company had $15.6 million of cash on hand
and remained debt free. Cash provided by operating activities was
$1.5 million for the quarter, a significant turnaround from cash
used in operating activities of $0.6 million in the second quarter
of fiscal 2014.
Net orders for the quarter were $5.7 million, and backlog at
March 31, 2015 was $6.3 million, up modestly on a sequential basis
from December 31, 2014. 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 a decade following
completion of their development phases. The Company expects that
these sole-source contracts will add to production sales already in
backlog.
Six Months Results
Total sales for the six months ended March 31, 2015 were $12.0
million compared to sales of $23.6 million for the six months ended
March 31, 2014. Gross margin for the first half of fiscal 2015 were
up from the year ago period, despite an unfavorable product mix
that dropped second quarter margins below those of the first
quarter. Net income for the six months ended March 31, 2015 was
$0.2 million compared to $1.8 million in the comparable year
earlier period. Earnings per share on a diluted basis for the six
months ended March 31, 2015 were $0.01 per share compared to $0.10
per share for the first half of the last fiscal year.
Shahram Askarpour, President of ISSC, commented, "During the
second quarter we continued to appropriately size the organization
for existing and anticipated engineering and production
requirements with the resulting reduction in ongoing operating
expenses. Engineering programs are progressing on schedule, with
the first flight test of the new Pilatus airframe scheduled for
May. We are also aggressively pursuing new programs and
opportunities especially for existing technologies like Flat Panel
Displays, Flight Management Systems and Standby Instruments, which
significantly shorten the production and deployment schedule,
reduce custom engineering requirements, yield attractive margins
and grow the backlog. Together with new opportunities arising from
changing macroeconomic conditions, such as reduced fuel costs, our
goal is to leverage our proprietary price-for-performance
advantages across the military, commercial air transport, and
general aviation markets to optimize returns and build value for
shareholders."
Conference Call
The Company will be hosting a conference call May 7, 2015 at
10:00 AM ET to discuss these results and its business outlook.
Those planning to dial in to the call should dial the following
number and register their names and company affiliations:
1-877-883-0383 and enter the PIN Number 8551127. 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
March 31, September 30, 2015 2014 (unaudited)
ASSETS
Current assets Cash and cash equivalents $ 15,568,221 $ 15,214,584
Accounts receivable 3,390,952 4,419,863 Unbilled receivables, net
5,859,955 7,425,728 Inventories 4,619,241 5,470,786 Deferred income
taxes 2,871,417 3,245,223 Prepaid expenses and other current assets
875,890 750,108 Total current assets 33,185,676
36,526,292 Property and equipment, net 7,363,487 7,467,663
Non-current deferred income taxes 1,007,361 57,707 Other assets
170,248 110,848 Total assets $ 41,726,772 $
44,162,510
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities Accounts payable $ 1,039,583 $ 2,402,652
Accrued expenses 2,491,242 4,077,290 Deferred revenue 760,847
526,320 Total current liabilities 4,291,672 7,006,262
Deferred income taxes 133,233 132,999 Other liabilities
11,902 11,725 Total liabilities 4,436,807
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 issued
and outstanding at March 31, 2015 and September 30, 2014 - -
Common stock, $.001 par value: 75,000,000 shares authorized,
18,736,089 and 18,714,449 issued at March 31, 2015 and September
30, 2014, respectively 18,736 18,715 Additional paid-in
capital 51,000,436 50,697,497 Retained earnings 6,914,553 6,684,902
Treasury stock, at cost, 1,846,451 shares at March 31, 2015 and
1,756,807 at September 30, 2014 (20,643,760 )
(20,389,590 ) Total shareholders' equity 37,289,965
37,011,524 Total liabilities and
shareholders' equity $ 41,726,772 $ 44,162,510
Innovative Solutions and Support, Inc.
Consolidated Statements of Operations (unaudited)
Three months ended Six
months ended March 31, March 31, 2015 2014 2015 2014 Net
sales $ 5,286,050 $ 12,495,016 12,010,306 23,600,827 Cost of
sales 3,702,654 8,709,891 7,665,105
16,035,266 Gross profit 1,583,396 3,785,125
4,345,201 7,565,561 Operating expenses: Research and
development 647,473 660,876 1,302,472 1,287,797 Selling, general
and administrative 1,573,888 2,034,609
3,514,379 3,779,500 Total operating expenses
2,221,361 2,695,485 4,816,851 5,067,297 Operating income
(loss) (637,965 ) 1,089,640 (471,650 ) 2,498,264 Interest
income 6,013 5,299 11,898 10,965 Other income 9,407
8,901 20,229 19,368 Income (loss)
before income taxes (622,545 ) 1,103,840 (439,523 ) 2,528,597
Income tax expense (benefit) (258,454 )
319,623 (669,174 ) 735,784 Net income (loss) $
(364,091 ) $ 784,217 $ 229,651 $ 1,792,813 Net income
(loss) per common share: Basic $ (0.02 ) $ 0.05 $ 0.01 $
0.11 Diluted $ (0.02 ) $ 0.05 $ 0.01 $ 0.10 Weighted
average shares outstanding: Basic
16,925,028
16,915,823
16,940,377 16,901,955
Diluted
16,925,028
17,152,678 17,043,735
17,123,512
Innovative Solutions & Support, Inc.Relland Winand,
610-646-0350Chief Financial Officer
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