Innovative Aerosystems Reports Second Quarter Fiscal 2026 Results
Key Terms
ebitda financial
adjusted ebitda financial
free cash flow financial
net debt financial
non-gaap financial measures financial
restricted stock units financial
performance stock units financial
non-qualified stock options financial
SECOND QUARTER FISCAL 2026 HIGHLIGHTS
(all comparisons versus the prior year period)
-
Net sales of
$22.4 million 2.0% -
Gross profit of
$11.4 million 51.1% -
Net Income of
$3.4 million $0.19 -
Adjusted Net Income(1) of
$4.8 million $0.26 -
EBITDA(1) of
$5.9 million $6.8 million -
Operating cash flow of
$2.3 million 78% -
Free cash flow(1) of
$0.7 million - Ratio of Net Debt to trailing twelve-month Adjusted EBITDA(1) of 1.7x as of March 31, 2026
- Completed three acquisitions supporting the Company’s growth initiatives
(1) |
This release includes non-GAAP financial measures, including Adjusted Net Income, Adjusted Net Income Per Share, EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt. Descriptions of these measures and reconciliations of these measures to the most directly comparable GAAP financial measures are provided in the appendix of this release |
MANAGEMENT COMMENTARY
“Our positive business momentum carried into the fiscal second quarter, highlighted by significant organic growth in our commercial aerospace and business aviation markets, continued strength in bookings, strong margin realization, and efficient free cash flow conversion,” stated Shahram Askarpour, President and Chief Executive Officer of Innovative Aerosystems.
“In recent months, we’ve completed three acquisitions that, in combination, further expand our base of recurring, high-value aftermarket revenue across legacy and next-generation aviation platforms,” continued Askarpour. “In February, we acquired autopilot product line technology from Moog, serving to expand our flight controls portfolio. In April, we announced two separate asset purchase and licensing agreements with Honeywell that strengthen our integrated cockpit avionics platform, while enhancing our capabilities within aircraft electrical power generation. Together, these transactions are projected to contribute
“In the fiscal second quarter of 2026, we shifted our operational mix to commercial aftermarket and business aviation given the anticipated lower F-16 revenues due to the timing of Improved Programmable Display Generator (“IPDG”) required approvals. As a result, we generated second quarter revenue of
“We continue to take a disciplined approach to capital allocation, to support profitable growth,” continued Askarpour. “We generated free cash flow of
“For the balance of the fiscal year, we expect our business to continue on a favorable growth trajectory, supported by continued strength across our diverse end-markets, momentum in new product launches, targeted investments in accretive, complementary assets that enhance our capabilities and overall value proposition. We remain committed to our strategic priorities, with a focus on maximizing long-term value for our shareholders,” concluded Askarpour.”
SECOND QUARTER FISCAL 2026 PERFORMANCE
Second quarter revenue was
Gross profit was
Second quarter 2026 operating expenses were
Net income was
Adjusted Net Income was
EBITDA was
New orders in the second quarter of fiscal 2026 were approximately
BALANCE SHEET, LIQUIDITY, AND FREE CASH FLOW
As of March 31, 2026, Innovative Aerosystems had total debt of
Cash flow provided by operations was
SECOND QUARTER FISCAL 2026 RESULTS CONFERENCE CALL
Innovative Aerosystems will host a conference call at 10:00 AM ET on Thursday, May 14, 2026, to discuss the Company’s fiscal 2026 second quarter results.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s website at https://iascorp.com/investor-relations/events-presentation/ and a replay of the webcast will be available at the same time shortly after the webcast is complete.
To participate in the live teleconference:
Domestic Live: 1-877-451-6152
International Live: 1-201-389-0879
To listen to a replay of the teleconference, which subsequently will be available through May 28, 2026:
Domestic Replay: 1-844-512-2921
International Replay: 1-412-317-6671
Conference ID: 13760101
NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Per Share (“Adjusted EPS”), Adjusted Net Cash provided by operating activities (“free cash flow”) and net debt are not measures of financial performance under
The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. The Company believes EBITDA to be relevant and useful information to its investors because it provides additional information in assessing the Company’s financial operating results. The Company’s management uses EBITDA in evaluating operating performance, ability to service debt, and ability to fund capital expenditures and pay dividends. However, EBITDA has certain limitations in that it does not reflect the impact of certain expenses on the Company’s consolidated statements of income, including interest expense, which is a necessary element of the Company’s costs because the Company has borrowed money in order to finance operations, income tax expense, which is a necessary element of costs because taxes are imposed by law, and depreciation and amortization, which are necessary elements of costs because the Company uses capital assets to generate income. EBITDA should be considered in addition to, and not as a substitute for, or superior to, operating income, net income or other measures of financial performance prepared in accordance with GAAP. Furthermore, the Company’s definition of EBITDA may not be comparable to similarly titled measures reported by other companies.
The Company defines Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, transaction-related acquisition and integration expenses, and non-recurring items. The Company believes that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to ongoing business performance, and that the presentation of this measure enhances an investor’s understanding of its financial performance.
Adjusted EBITDA has important limitations as analytical tools. For example, Adjusted EBITDA:
- does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized, which assets may have to be replaced in the future;
- does not reflect changes in, or cash requirements for, the Company’s working capital needs;
- excludes the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations;
- does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on the Company’s debt; and
- excludes certain tax payments that may represent a reduction in available cash.
Adjusted Net Income and Adjusted EPS: We believe Adjusted Net Income and Adjusted EPS are important measures of our recurring operations as they exclude items that may not be indicative of our core operating results. These measures represent GAAP net income and diluted net income per share adjusted for the impact of certain items directly related to acquisitions and other non-recurring items. These adjustments include : (I) the amortization of acquired intangibles; (ii) acquisition and integration charges and other non-recurring items; and (iii) the related tax effect. We specifically exclude amortization of acquired intangibles because it is generally a fixed non-cash expense that can be significantly impacted by the timing and/or size of acquisitions and management does not use this measure to evaluate the Company’s core operating results. Although the Company excludes the amortization of acquired intangibles from Adjusted Net Income and Adjusted EPS, management believes that it is important for investors to understand that such intangible assets were recorded as part of acquisition accounting and contribute to revenue generation.
Free cash flow is calculated as net cash provided by operating activities less capital expenditures. The Company believes that free cash flow is an important financial measure for use in evaluating financial performance because it measures the Company’s ability to generate additional cash from its business operations.
Net debt is calculated as total debt, excluding debt issuance costs minus cash and cash equivalents, and Leverage Ratio is calculated as Net Debt divided by trailing 12 months Adjusted EBITDA. The Company believes that Net debt and Leverage Ratio are important financial measures for use in measuring the Company’s financial performance relative to its level of debt.
A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below.
ABOUT INNOVATIVE AEROSYSTEMS
Headquartered in
FORWARD-LOOKING STATEMENTS
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,” “intends,” “forecasts,” “expects,” “plans,” “could,” “should,” “would,” “is likely,” “projected,” “might,” “potential,” “preliminary,” “provisionally,” references to “fiscal year 2026,” “guidance” “positioning” or “drivers” for fiscal 2026 and thereafter and “long term” or “longer-term” targets and “next phase of growth” information, 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; plans to grow organically through new product development and related market expansion, as well as via acquisitions; the expansion of the
INNOVATIVE SOLUTIONS AND SUPPORT, INC CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
||||||
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March 31, |
|
September 30, |
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|
2026 |
|
2025 |
||
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,764,157 |
|
$ |
2,693,595 |
Accounts receivable |
|
|
13,188,080 |
|
|
12,956,476 |
Contract assets |
|
|
1,655,807 |
|
|
5,320,353 |
Inventories |
|
|
28,067,469 |
|
|
25,802,181 |
Prepaid inventory |
|
|
— |
|
|
2,562,297 |
Prepaid expenses and other current assets |
|
|
3,541,373 |
|
|
1,392,398 |
|
|
|
|
|
|
|
Total current assets |
|
|
53,216,886 |
|
|
50,727,300 |
|
|
|
|
|
|
|
Goodwill |
|
|
15,773,104 |
|
|
6,703,104 |
Intangible assets, net |
|
|
46,944,050 |
|
|
23,582,615 |
Property and equipment, net |
|
|
20,722,377 |
|
|
18,804,536 |
Deferred income taxes |
|
|
939,192 |
|
|
2,824,132 |
Other assets |
|
|
670,833 |
|
|
718,466 |
|
|
|
|
|
|
|
Total assets |
|
$ |
138,266,442 |
|
$ |
103,360,153 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Current portion of long-term debt, net |
|
$ |
5,641,501 |
|
$ |
2,438,802 |
Accounts payable |
|
|
4,487,502 |
|
|
3,578,411 |
Accrued expenses |
|
|
4,128,653 |
|
|
8,161,967 |
Contract liabilities |
|
|
2,220,944 |
|
|
2,481,929 |
|
|
|
|
|
|
|
Total current liabilities |
|
|
16,478,600 |
|
|
16,661,109 |
|
|
|
|
|
|
|
Long-term debt, net |
|
|
49,279,407 |
|
|
21,700,005 |
Other liabilities |
|
|
396,497 |
|
|
396,497 |
|
|
|
|
|
|
|
Total liabilities |
|
|
66,154,504 |
|
|
38,757,611 |
|
|
|
|
|
|
|
Total shareholders’ equity |
|
|
72,111,938 |
|
|
64,602,542 |
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
138,266,442 |
|
$ |
103,360,153 |
INNOVATIVE SOLUTIONS AND SUPPORT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
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Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
||||||||||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
||||||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
14,310,928 |
|
|
$ |
13,180,032 |
|
|
$ |
27,875,059 |
|
|
$ |
23,164,266 |
|
|
Services |
|
|
8,054,101 |
|
|
|
8,756,182 |
|
|
|
16,297,053 |
|
|
|
14,740,677 |
|
|
Total net sales |
|
|
22,365,029 |
|
|
|
21,936,214 |
|
|
|
44,172,112 |
|
|
|
37,904,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
7,216,013 |
|
|
|
5,275,918 |
|
|
|
13,849,386 |
|
|
|
11,538,608 |
|
|
Services |
|
|
3,714,031 |
|
|
|
5,393,073 |
|
|
|
7,003,471 |
|
|
|
8,488,655 |
|
|
Total cost of sales |
|
|
10,930,044 |
|
|
|
10,668,991 |
|
|
|
20,852,857 |
|
|
|
20,027,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
11,434,985 |
|
|
|
11,267,223 |
|
|
|
23,319,255 |
|
|
|
17,877,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
1,789,348 |
|
|
|
867,228 |
|
|
|
3,116,963 |
|
|
|
1,974,964 |
|
|
Selling, general and administrative |
|
|
4,702,222 |
|
|
|
3,415,675 |
|
|
|
8,966,471 |
|
|
|
7,574,578 |
|
|
Total operating expenses |
|
|
6,491,570 |
|
|
|
4,282,903 |
|
|
|
12,083,434 |
|
|
|
9,549,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
4,943,415 |
|
|
|
6,984,320 |
|
|
|
11,235,821 |
|
|
|
8,328,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(508,860 |
) |
|
|
(387,318 |
) |
|
|
(1,004,931 |
) |
|
|
(814,467 |
) |
|
Interest income |
|
|
3,705 |
|
|
|
4,628 |
|
|
|
7,823 |
|
|
|
9,878 |
|
|
Other income |
|
|
— |
|
|
|
— |
|
|
|
64,100 |
|
|
|
6 |
|
|
Income before income taxes |
|
|
4,438,260 |
|
|
|
6,601,630 |
|
|
|
10,302,813 |
|
|
|
7,523,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
1,004,168 |
|
|
|
1,265,288 |
|
|
|
2,809,658 |
|
|
|
1,451,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
3,434,092 |
|
|
$ |
5,336,342 |
|
|
$ |
7,493,155 |
|
|
$ |
6,072,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.19 |
|
|
$ |
0.30 |
|
|
$ |
0.42 |
|
|
$ |
0.35 |
|
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.30 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
17,801,685 |
|
|
|
17,548,844 |
|
|
|
17,747,927 |
|
|
|
17,531,328 |
|
|
Diluted |
|
|
18,302,283 |
|
|
|
17,643,994 |
|
|
|
18,182,892 |
|
|
|
17,613,686 |
|
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
|||||||||||
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
|
|
|
|
|
|
|
||||
Net Income |
$ |
3,434,092 |
|
$ |
5,336,342 |
|
$ |
7,493,155 |
|
$ |
6,072,534 |
Income tax expense |
|
1,004,168 |
|
|
1,265,288 |
|
|
2,809,658 |
|
|
1,451,021 |
Interest expense |
|
508,860 |
|
|
387,318 |
|
1,004,931 |
|
|
814,467 |
|
Depreciation and amortization |
|
966,212 |
|
|
637,566 |
|
|
1,991,587 |
|
|
2,004,641 |
EBITDA |
$ |
5,913,332 |
|
$ |
7,626,514 |
|
$ |
13,299,331 |
|
$ |
10,342,663 |
Acquisition related costs |
|
777,156 |
|
|
90,230 |
|
|
800,460 |
|
|
347,780 |
Other strategic initiatives |
|
65,589 |
|
|
- |
|
|
74,937 |
|
|
104,977 |
Adjusted EBITDA |
$ |
6,757,076 |
|
$ |
7,716,744 |
|
$ |
14,174,727 |
|
$ |
10,795,420 |
|
|||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
|||||||
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|||||
2026 |
|
2025 |
|
2026 |
|
2025 |
|
|
|
|
|
|
|
|
|
EBITDA Margin * |
|
|
|
|
|
|
|
Adjusted EBITDA Margin ** |
|
|
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|
|
|
|
* EBITDA Margin is defined as EBITDA divided by total revenue |
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** Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by total revenue |
|||||||
Reconciliation - GAAP Net Income and GAAP income per share to Adjusted Net Income and Adjusted EPS |
Three Months Ended March 31, |
||||||||||||
2026 |
|
2025 |
|
||||||||||
(Unaudited) |
Amount |
Per Share |
Amount |
Per Share |
|||||||||
GAAP net income and EPS |
$ |
3,434,092 |
|
$ |
0.19 |
|
$ |
5,336,342 |
|
$ |
0.30 |
|
|
Amortization of acquired Intangibles |
966,212 |
|
0.05 |
|
365,882 |
|
0.02 |
|
|||||
Acquisition related costs |
|
777,156 |
|
0.04 |
|
90,230 |
|
0.01 |
|
||||
Other strategic initiatives |
66,589 |
|
- |
|
- |
|
0.00 |
|
|||||
Tax impact of adjustments* |
|
(490,507 |
) |
(0.02 |
) |
(91,888 |
) |
(0.01 |
) |
||||
Adjusted Net Income and Adjusted EPS* |
$ |
4,834,541 |
|
$ |
0.26 |
|
$ |
5,700,566 |
|
$ |
0.32 |
|
|
*The blended effective tax rates were approximately |
|
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|
|
|
|
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|
|||||
|
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|
|
|
|
|
|
|||||
|
|
Three Months Ended March 31, |
|||||||||||
|
|
2026 |
|
|
2025 |
|
|||||||
Weighted average shares outstanding |
|
|
|
|
|||||||||
Basic |
|
17,801,685 |
|
|
|
17,548,844 |
|
|
|||||
Diluted |
|
18,302,283 |
|
|
|
17,643,994 |
|
|
|||||
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||
Reconciliation - GAAP Net Income and GAAP income per share to Adjusted Net Income and Adjusted EPS |
Six Months Ended March 31, |
||||||||||||
2026 |
|
2025 |
|
||||||||||
(Unaudited) |
Amount |
Per Share |
Amount |
Per Share |
|||||||||
GAAP net income and EPS |
$ |
7,493,155 |
|
$ |
0.42 |
|
$ |
6,072,534 |
|
$ |
0.34 |
|
|
Amortization of acquired Intangibles |
1,991,587 |
|
0.11 |
|
1,110,158 |
|
0.06 |
|
|||||
Acquisition related costs |
|
800,460 |
|
0.04 |
|
347,780 |
|
0.02 |
|
||||
Other strategic initiatives |
74,937 |
|
- |
|
104,977 |
|
0.01 |
|
|||||
Tax impact of adjustments* |
|
(648,663 |
) |
(0.04 |
) |
(1,261,491 |
) |
(0.07 |
) |
||||
Adjusted Net Income and Adjusted EPS* |
$ |
9,711,476 |
|
$ |
0.27 |
|
$ |
6,373,958 |
|
$ |
0.36 |
|
|
*The blended effective tax rates were approximately |
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Six Months Ended March 31, |
|||||||||||
|
|
2026 |
|
|
2025 |
|
|||||||
Weighted average shares outstanding |
|
|
|
|
|||||||||
Basic |
|
17,747,927 |
|
|
|
17,531,328 |
|
|
|||||
Diluted |
|
18,182,892 |
|
|
|
17,613,686 |
|
|
|||||
Free Cash Flow |
|||||||||||||
Three Months Ended |
|
Six Months Ended |
|||||||||||
March 31, |
|
March 31, |
|||||||||||
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
||
Operating Cashflow |
|
$ |
2,291,339 |
|
$ |
1,287,906 |
|
|
$ |
10,450,931 |
|
$ |
3,129,364 |
Capital Expenditures |
|
|
1,624,502 |
|
|
1,555,651 |
|
|
|
2,734,392 |
|
|
1,817,015 |
Free Cashflow |
|
$ |
666,837 |
|
$ |
(267,745 |
) |
|
$ |
7,716,536 |
|
$ |
1,312,349 |
Net Debt |
||||||
As of March 31, |
||||||
|
2026 |
|
|
2025 |
||
Total Debt* |
|
$ |
55,125,000 |
|
$ |
27,401,323 |
Cash |
|
6,764,157 |
|
1,225,648 |
||
Net Debt* |
|
$ |
48,360,843 |
|
$ |
26,175,675 |
* Excludes capitalized debt fees |
||||||
|
|
|
||||
Leverage Ratio |
|
As of March 31, |
||||
|
|
|
2026 |
|
|
2025 |
Net Debt |
|
$ |
48,360,843 |
|
$ |
26,175,675 |
Divided by trailing twelve months Adjusted EBITDA |
|
|
28,214,269 |
|
|
19,502,022 |
Leverage Ratio** |
|
1.7x |
|
1.4x |
||
** Leverage Ratio is calculated as Net Debt divided by trailing 12 months Adjusted EBITDA |
|
|
|
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20260514894053/en/
IR CONTACT
Paul Bartolai or Noel Ryan
ISSC@val-adv.com
Source: Innovative Aerosystems