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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 14, 2024
INNOVATIVE SOLUTIONS AND SUPPORT, INC.
(Exact name of registrant as specified in its charter)
| Pennsylvania | 001-41503 | 23-2507402 |
| (State or other jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
720 Pennsylvania Drive
Exton, Pennsylvania 19341
(Address of principal executive offices) (Zip Code)
(610) 646-9800
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.001 per share | ISSC | Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
On February 14, 2024, Innovative Solutions and Support, Inc. issued a press release announcing its financial results for its first quarter ended December 31, 2023. A copy of that press release is attached as Exhibit 99.1 to this report and incorporated herein by reference.
The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit Number | Description |
| 99.1 | Press Release, dated February 14, 2024, announcing financial results for the fiscal first quarter ended December 31, 2023. |
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the inline XBRL document. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INNOVATIVE SOLUTIONS AND SUPPORT, INC. | ||
| Date: February 14, 2024 | By: | /s/ Relland Winand |
| Relland Winand | ||
| Interim Chief Financial Officer | ||
Exhibit 99.1
Innovative Solutions & Support, Inc. Announces First Quarter Fiscal 2024 Financial Results
EXTON, Pa. – February 14, 2024 – (BUSINESS WIRE) Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) today announced its financial results for the first quarter of fiscal 2024, which ended December 31, 2023.
For the first quarter of fiscal 2024, IS&S reported net sales of $9.3 million, up 43% from $6.5 million in the first quarter a year ago. The Company reported net income of $1,057,350, or $0.06 per share, increases of 51% and 50%, respectively, compared to $698,651, or $0.04 per share, in the first quarter of fiscal 2023.
Gross profit in the first quarter of 2024 was $5.5 million, or 59.3% of sales, compared to $3.7 million, or 57.1% of sales in the first quarter of 2023.
Sales and earnings in the first quarter of 2024 continued to benefit from the product lines acquired from Honeywell International, Inc. (“Honeywell”) pursuant to an exclusive license and asset acquisition that closed in the third quarter of 2023.
Shahram Askarpour, Chief Executive Officer of IS&S, said, “We are pleased to report another quarter of year-over-year growth in both revenues and earnings. The integration of the product lines acquired from Honeywell is progressing and ongoing. These products complement our existing portfolio of products, offer recurring revenues, and introduce IS&S to a new market segment. As we continue to generate gross margins approaching 60% and strong cash flow, our debt position was reduced to $10.6 million as of December 31, 2023, or approximately $8.9 million less than just three months ago. Revenues were up 43% in the quarter, keeping us on pace with our goal to grow annualized revenues by approximately 40% compared to our pre-acquisition revenue levels upon the completion of the integration.”
For the first quarter of fiscal 2024, the Company generated $4.2 million of cash flow from operations.
New orders in the first quarter of fiscal 2024 were approximately $10.4 million. Backlog as of December 31, 2023, was $14.6 million. Only purchase orders in hand are included in our sales backlog, which primarily consists of orders from our OEM customers that have long-term programs—Pilatus PC-24, Textron King Air, Boeing T-7 Red Hawk and the Boeing KC-46A. IS&S expects these programs to remain in production for approximately a decade and anticipates that they will continue to generate future sales. Due to their nature, the products licensed from Honeywell do not typically enter backlog.
Conference Call
The Company will be hosting a conference call on Thursday, February 15, 2024 at 10:00 AM ET to discuss these results and the Company’s business outlook and product development. Please use the following dial- in number to register your name and Company affiliation for the conference call: 844-739-3798 and ask to join the Innovative Solutions & Support call. 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), Auto-Throttle Systems and advanced GPS receivers for precision low carbon footprint navigation.
FORWARD LOOKING STATEMENT DISCLAIMER
In addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In this press release, the words “anticipates,” “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “forecasts,” “expects,” “plans,” “could,” “should,” “would,” “is likely”, “projected”, “might”, “potential”, “preliminary”, “provisionally” and similar expressions, as they relate to the business or to its management, are intended to identify forward-looking statements, but they are not exclusive means of identifying them. All forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, statements about: future revenue; financial performance and profitability; future business opportunities; the integration of the Honeywell product lines, including statements regarding the ongoing integration, how the product lines complement our existing portfolio of products, offer recurring revenues and introduce us to a new market segment, and expectations regarding growth of annualized revenues upon completion of such integration; and the timing of our long-term programs remaining in production and continuing to generate future sales. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions, 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, the Company’s ability to efficiently integrate acquired and licensed product lines, including the Honeywell product lines, into its operations; a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the economic and business environments in which the Company operates. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and subsequent reports filed 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. 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
(unaudited)
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 467,334 | $ | 3,097,193 | ||||
| Accounts receivable | 5,583,593 | 9,743,714 | ||||||
| Contract asset | 647,644 | 487,139 | ||||||
| Inventories | 7,799,935 | 6,139,713 | ||||||
| Prepaid inventory | 11,509,067 | 12,069,114 | ||||||
| Prepaid expenses and other current assets | 919,639 | 1,073,012 | ||||||
| Asset held for sale | - | 2,063,818 | ||||||
| Total current assets | 26,927,212 | 34,673,703 | ||||||
| Goodwill | 3,557,886 | 3,557,886 | ||||||
| Intangible assets, net | 15,916,821 | 16,185,321 | ||||||
| Property and equipment, net | 7,931,009 | 7,892,427 | ||||||
| Deferred income taxes | 1,141,048 | 456,392 | ||||||
| Other assets | 224,221 | 191,722 | ||||||
| Total assets | $ | 55,698,197 | $ | 62,957,451 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Current portion of lomg-term debt | $ | 10,611,514 | $ | 2,000,000 | ||||
| Accounts payable | 1,545,799 | 1,337,275 | ||||||
| Accrued expenses | 2,984,947 | 2,918,325 | ||||||
| Contract liability | 228,306 | 143,359 | ||||||
| Total current liabilities | 15,370,566 | 6,398,959 | ||||||
| Long-term debt | - | 17,500,000 | ||||||
| Other liabilities | 427,581 | 421,508 | ||||||
| Total liabilities | 15,798,147 | 24,320,467 | ||||||
| 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, 2023 and September 30, 2023 | - | - | ||||||
| Common stock, $.001 par value: 75,000,000 shares authorized, 19,550,184 and 19,543,441 issued at December 31, 2023 and September 30, 2023, respectively | 19,549 | 19,543 | ||||||
| Additional paid-in capital | 54,522,975 | 54,317,265 | ||||||
| Retained earnings | 6,726,063 | 5,668,713 | ||||||
| Treasury stock, at cost, 2,096,451 shares at December 31, 2023 and at September 30, 2023 | (21,368,537 | ) | (21,368,537 | ) | ||||
| Total shareholders' equity | 39,900,050 | 38,636,984 | ||||||
| Total liabilities and shareholders' equity | $ | 55,698,197 | $ | 62,957,451 | ||||
Innovative Solutions and Support, Inc.
Consolidated Statements of Operations
(unaudited)
| Three months ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Sales: | ||||||||
| Product | $ | 4,424,108 | $ | 5,088,208 | ||||
| Customer service | 4,227,247 | 1,061,149 | ||||||
| Engineering development contracts | 656,708 | 366,899 | ||||||
| 9,308,063 | 6,516,256 | |||||||
| Cost of sales: | ||||||||
| Product | 1,781,345 | 2,415,944 | ||||||
| Customer service | 1,726,961 | 319,102 | ||||||
| Engineering development contracts | 276,595 | 57,406 | ||||||
| Total cost of sales | 3,784,901 | 2,792,452 | ||||||
| Gross Profit | 5,523,162 | 3,723,804 | ||||||
| Operating expenses: | ||||||||
| Research and development | 901,144 | 670,445 | ||||||
| Selling, general and administrative | 3,006,819 | 2,261,863 | ||||||
| Total operating expenses | 3,907,963 | 2,932,308 | ||||||
| Operating income | 1,615,199 | 791,496 | ||||||
| Interest (expense) | (360,013 | ) | - | |||||
| Interest income | 79,479 | 115,892 | ||||||
| Other income | 17,699 | 18,196 | ||||||
| Income before income taxes | 1,352,364 | 925,584 | ||||||
| Income tax expense | 295,014 | 226,933 | ||||||
| Net income | $ | 1,057,350 | $ | 698,651 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.06 | $ | 0.04 | ||||
| Diluted | $ | 0.06 | $ | 0.04 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 17,451,362 | 17,316,766 | ||||||
| Diluted | 17,474,906 | 17,326,177 | ||||||