Business Wire | Aug 5, 2020 04:30PM EDT

Innovative Solutions & Support, Inc. Announces Third Quarter Fiscal 2020 Financial Results

Aug. 05, 2020

EXTON, Pa.--(BUSINESS WIRE)--Aug. 05, 2020--Innovative Solutions & Support, Inc. ("IS&S" or the "Company") (NASDAQ: ISSC) today announced its financial results for the third quarter of fiscal 2020, ended June 30, 2020.

For the third quarter of fiscal 2020, the Company reported net sales of $6.0 million, up 30% from $4.6 million in the third quarter a year ago. The Company reported third quarter net income of $1.3 million, or $0.07 per share, an increase of 146% and 133% respectively, as compared to the $0.5 million, or $0.03 per share, in the third quarter of fiscal 2019.

Geoffrey Hedrick, Chairman and Chief Executive Officer of IS&S, said, "The necessary and prudent actions we implemented early on to reduce the impact of the pandemic have once again led to a strong performance. Revenues increased 30% in the third quarter as compared to the prior quarter, and we generated our best quarterly operating income in thirteen quarters and our best nine months operating income in four years. We signed an OEM contract to supply Textron with our ThrustSense(r) Auto-throttle with LifeGuard(tm) Protection as standard equipment on all their new King Air 360 turboprops. Textron will also offer Auto-throttle with LifeGuard(tm) Protection for retrofit at all of its service centers to the thousands of King Airs currently in use. Our financial performance over the last few quarters, as well as the expanding number of new OEM platforms on which IS&S is standard equipment, are strong indicators of the value of our innovative technology. We believe our increased market presence will lead to more profitable growth opportunities and continue to build shareholder value."

At June 30, 2020, the Company had $23.0 million of cash on hand, as net cash flows from operating activities were $0.6 million over the first nine months of the year. New orders in the third quarter of fiscal 2020 were approximately $2.7 million, and backlog as of June 30, 2020 was $6.5 million. Backlog excludes potential future sole-source production orders from the Pilatus PC-24, KC-46A and the Textron King Air 360 all of which are currently in production. The Company expects these programs to remain in production for multiple years and that these contracts will add to production sales already in backlog.

Nine Months Results

Total sales for the nine months ended June 30, 2020, were $15.3 million, up 20% from $12.8 million for the nine months ended June 30, 2019. For the nine months ended June 30, 2020, the company reported net income of $2.0 million, or $0.12 per share, an increase of 137% and 140% respectively, as compared to the $0.9 million, or $0.05 per share, for the first nine months of fiscal 2019.

Conference Call

The Company will be hosting a conference call on Thursday, August 6, 2020, at 10:00 a.m. 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: 877-270-2148 and ask to be joined into 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.

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 June 30 September 30, 2020 2019

(unaudited)ASSETSCurrent assetsCash and cash equivalents $ 22,984,249 $ 22,416,830

Accounts receivable 3,864,656 2,348,537

80,182 Contract asset -

Inventories 4,709,342 4,470,694

Prepaid expenses and other 1,107,723 642,049 current assets Total current assets 32,665,970 29,958,292

Property and equipment, net 8,225,732 8,444,692

Other assets 205,276 154,041

Total assets $ 41,096,978 $ 38,557,025

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilitiesAccounts payable $ 949,080 $ 1,079,073

Accrued expenses 1,506,790 1,110,918

Contract liability 106,341 29,231

Total current liabilities 2,562,211 2,219,222

Non-current deferred income 129,689 129,651 taxes Other liabilities 2,241 -

Total liabilities 2,694,141 2,348,873

Commitments and contingencies Shareholders' equity Preferred stock, 10,000,000shares authorized, $.001 parvalue, of which200,000 shares are authorizedas Class A Convertible stock. No shares issued and outstanding at June $ $ - 30, 2020 and September 30, 2019 -

Common stock, $.001 par value: 75,000,000 sharesauthorized, 19,080,877 and 19,005,487issued at June 30, 2020 and 19,081 19,006 September 30, 2019,respectively Additional paid-in capital 52,155,835 51,987,096

Retained earnings 7,596,458 5,570,587

Treasury stock, at cost,2,096,451 shares at June 30,2020 and September 30, 2019 (21,368,537 ) (21,368,537 )

Total shareholders' equity 38,402,837 36,208,152

Total liabilities and $ 41,096,978 $ 38,557,025 shareholders' equity

Innovative Solutions and Support, Inc.Consolidated Statements of Operations(unaudited) Three months ended Nine months ended June 30, June 30, 2020 2019 2020 2019

4,589,824 15,300,182 Net Sales 5,953,689 12,770,601

2,064,617 Cost of sales 2,559,016 7,008,691 5,733,385

2,525,207 Gross profit 3,394,673 8,291,491 7,037,216

Operatingexpenses: Research and 722,525 development 870,805 2,249,439 1,967,379

Selling, 1,416,053 general and 1,279,422 4,514,085 4,414,126 administrativeTotal 2,138,578 operating 2,150,227 6,763,524 6,381,505expenses Operating 386,629 income 1,244,446 1,527,967 655,711

Interest 99,916 income 7,767 152,358 147,948

24,714 Other income 16,261 44,760 57,314

Income before 511,259 income taxes 1,268,474 1,725,085 860,973

Income tax expense 8,616 - (300,786) 7,794(benefit) $ $ 511,259 $2,025,871 $ Net income 1,259,858 853,179

Net income per common share: $ $ 0.03 $ $ Basic 0.07 0.12 0.05

$ $ 0.03 $ $ Diluted 0.07 0.12 0.05

Weighted average sharesoutstanding: 16,880,341 16,931,049 Basic 16,952,973 16,860,503

16,978,643 17,097,414 Diluted 17,087,275 16,898,321

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CONTACT: Investor Relations: Relland Winand 610-646-0350