Innovative Solutions & Support Reports Second Quarter 2025 Results
SECOND QUARTER 2025 HIGHLIGHTS
(all comparisons versus the prior year period unless otherwise noted)
-
Net revenue of
, +$21.9 million 104% -
Gross profit of
; gross margin of$11.3 million 51.4% -
Net Income of
, or$5.3 million $.30 per diluted share -
Adjusted EBITDA(1) of
, +219 %$7.7 million - Ratio of net debt to trailing twelve-month Adjusted EBITDA of 1.4x as of March 31, 2025
(1) |
|
Adjusted EBITDA is a non-GAAP measure. Reconciliation of adjusted EBITDA to net income, the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release. |
MANAGEMENT COMMENTARY
“Our positive momentum carried over into the second quarter of fiscal 2025, with revenues more than doubling to
“We made important progress on our key growth initiatives during the quarter, keeping us on track to achieve our full year target of growing both revenue and EBITDA by more than
“We completed the integration of our NetSuite Enterprise Resource Planning system during the quarter, which provides us a platform to efficiently scale our business,” stated Jeffrey DiGiovanni, Chief Financial Officer of IS&S. “With our current cash balance and availability under our credit facility equaling more than
“We continued to deliver on our strategic priorities during the second quarter, with important progress across our commercial, operational and capital allocation targets,” concluded Askarpour. “We are building a scalable platform equipped to deliver integrated avionics solutions to a broad range of commercial and military customers, and our US-based manufacturing footprint and vertically integrated model uniquely positions us for success, especially in the current market environment. As we look forward to the second half of our current fiscal year, we remain encouraged by the momentum in our business and are committed to both delivering on our near-term financial targets as well as making long-term investments to scale our business and deliver value for our shareholders.”
SECOND QUARTER 2025 PERFORMANCE
Second quarter revenue was
Gross profit was
Second quarter 2025 operating expenses were
Net income was
Adjusted EBITDA was
New orders in the second quarter of fiscal 2025 were
BALANCE SHEET, LIQUIDITY AND FREE CASH FLOW
As of March 31, 2025, IS&S had total long-term debt of
Cash flow provided by operations was
SECOND QUARTER 2025 RESULTS CONFERENCE CALL
IS&S will host a conference call at 9:00 AM ET on Thursday May 15, 2025, to discuss the Company’s second quarter 2025 results.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the IS&S website at https://innovative-ss.com/iss-investor-relations/events-presentations/, 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: |
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(844) 739-3798 |
|||
International Live: |
|
(412) 317-5714 |
To listen to a replay of the teleconference, which will be available through May 29, 2025:
Domestic Replay: |
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(844) 512-2921 |
||
International Replay: |
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(412) 317-6671 |
||
Passcode: |
|
10199274 |
NON-GAAP FINANCIAL MEASURES
EBITDA, adjusted EBITDA, adjusted net income, adjusted diluted earnings per share (“EPS”) and adjusted net cash provided by operating activities (“free cash flow”) are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, net income (for EBITDA and adjusted EBITDA), diluted earnings per share (for adjusted diluted EPS) or net cash provided by operating activities (for free cash flow), which the Company considers to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, readers should not consider these non-GAAP financial measures in isolation or as substitutes for net income, diluted earnings per share, net cash provided by operating activities or other consolidated income statement data prepared in accordance with GAAP. Other companies in the Company’s industry may define or calculate these non-GAAP financial measures differently than the Company does, and accordingly, these measures may not be comparable to similarly titled measures used by other companies.
The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. The Company believes EBITDA to be relevant and useful information to their 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
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 an analytical tool. 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.
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.
A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is set forth below.
ABOUT INNOVATIVE SOLUTIONS & SUPPORT
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,” “anticipates,” “intends,” “forecasts,” “expects,” “plans,” “could,” “should,” “would,” “is likely”, “projected”, “might”, “potential”, “preliminary”, “provisionally”, references to “fiscal 2025”, 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, |
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September 30, |
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|
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2025 |
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2024 |
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|
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ASSETS |
|
|
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Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
1,225,648 |
|
|
$ |
538,977 |
|
Accounts receivable |
|
|
13,823,088 |
|
|
12,612,482 |
||
Contract assets |
|
|
1,769,373 |
|
|
|
1,680,060 |
|
Inventories |
|
|
18,853,112 |
|
|
|
12,732,381 |
|
Prepaid inventory |
|
|
4,430,139 |
|
|
|
5,960,404 |
|
Prepaid expenses and other current assets |
|
|
1,360,211 |
|
|
|
1,161,394 |
|
|
|
|
|
|
|
|
||
Total current assets |
|
|
41,461,571 |
|
|
|
34,685,698 |
|
|
|
|
|
|
|
|
||
Goodwill |
|
|
6,703,104 |
|
|
|
5,213,104 |
|
Intangible assets, net |
|
|
24,688,129 |
|
|
|
27,012,292 |
|
Property and equipment, net |
|
|
14,733,011 |
|
|
|
13,372,298 |
|
Deferred income taxes |
|
|
2,134,839 |
|
|
|
1,625,144 |
|
Other assets |
|
|
165,591 |
|
|
|
473,725 |
|
|
|
|
|
|
|
|
||
Total assets |
|
$ |
89,886,245 |
|
|
$ |
82,382,261 |
|
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
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Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
|
4,710,564 |
|
|
|
2,315,479 |
|
Accrued expenses |
|
|
3,072,956 |
|
|
|
4,609,294 |
|
Contract liability |
|
|
731,793 |
|
|
|
340,481 |
|
|
|
|
|
|
|
|
||
Total current liabilities |
|
|
8,515,313 |
|
|
|
7,265,254 |
|
|
|
|
|
|
|
|
||
Long-term debt |
|
|
27,401,323 |
|
|
|
28,027,002 |
|
Other liabilities |
|
|
456,717 |
|
|
|
451,350 |
|
|
|
|
|
|
|
|
||
Total liabilities |
|
|
36,373,353 |
|
|
|
35,743,606 |
|
|
|
|
|
|
|
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||
|
|
|
|
|
|
|
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Total shareholders’ equity |
|
|
53,512,892 |
|
|
|
46,638,655 |
|
|
|
|
|
|
|
|
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Total liabilities and shareholders’ equity |
|
$ |
89,886,245 |
|
|
$ |
82,382,261 |
|
INNOVATIVE SOLUTIONS AND SUPPORT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
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Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
13,180,032 |
|
|
$ |
4,895,589 |
|
|
$ |
23,164,266 |
|
|
$ |
9,319,697 |
|
Services |
|
|
8,756,182 |
|
|
|
5,843,927 |
|
|
|
14,740,677 |
|
|
|
10,727,882 |
|
Total net sales |
|
|
21,936,214 |
|
|
|
10,739,516 |
|
|
|
37,904,943 |
|
|
|
20,047,579 |
|
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|
|
|
|
|
|
|
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Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
5,275,918 |
|
|
|
2,347,695 |
|
|
|
11,538,608 |
|
|
|
4,129,040 |
|
Services |
|
|
5,393,073 |
|
|
|
2,809,459 |
|
|
|
8,488,655 |
|
|
|
4,813,015 |
|
Total cost of sales |
|
|
10,668,991 |
|
|
|
5,157,154 |
|
|
|
20,027,263 |
|
|
|
8,942,055 |
|
|
|
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|
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Gross profit |
|
|
11,267,223 |
|
|
|
5,582,362 |
|
|
|
17,877,680 |
|
|
|
11,105,524 |
|
|
|
|
|
|
|
|
|
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|
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Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
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Research and development |
|
|
867,228 |
|
|
|
1,031,119 |
|
|
|
1,974,964 |
|
|
|
1,932,263 |
|
Selling, general and administrative |
|
|
3,415,675 |
|
|
|
2,908,193 |
|
|
|
7,574,578 |
|
|
|
5,915,012 |
|
Total operating expenses |
|
|
4,282,903 |
|
|
|
3,939,312 |
|
|
|
9,549,542 |
|
|
|
7,847,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
6,984,320 |
|
|
|
1,643,050 |
|
|
|
8,328,138 |
|
|
|
3,258,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(387,318 |
) |
|
|
(171,470 |
) |
|
|
(814,467 |
) |
|
|
(531,483 |
) |
Interest income |
|
|
4,628 |
|
|
|
36,200 |
|
|
|
9,878 |
|
|
|
115,679 |
|
Other income |
|
|
— |
|
|
|
26,472 |
|
|
|
6 |
|
|
|
44,171 |
|
Income before income taxes |
|
|
6,601,630 |
|
|
|
1,534,252 |
|
|
|
7,523,555 |
|
|
|
2,886,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income tax expense (benefit) |
|
|
1,265,288 |
|
|
|
325,936 |
|
|
|
1,451,021 |
|
|
|
620,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
5,336,342 |
|
|
$ |
1,208,316 |
|
|
$ |
6,072,534 |
|
|
$ |
2,265,666 |
|
|
|
|
|
|
|
|
|
|
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Net income per common share: |
|
|
|
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|
|
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Basic |
|
$ |
0.30 |
|
|
$ |
0.07 |
|
|
$ |
0.35 |
|
|
$ |
0.13 |
|
Diluted |
|
$ |
0.30 |
|
|
$ |
0.07 |
|
|
$ |
0.34 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
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Weighted average shares outstanding: |
|
|
|
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|
|
|
|
|
|
|
||||
Basic |
|
|
17,548,844 |
|
|
|
17,456,120 |
|
|
|
17,531,328 |
|
|
|
17,453,741 |
|
Diluted |
|
|
17,643,994 |
|
|
|
17,487,527 |
|
|
|
17,613,686 |
|
|
|
17,481,217 |
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
|||||||||||||||
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||
|
2025 |
|
|
|
2024 |
|
|
|
2025 |
|
|
|
2024 |
||
|
|
|
|
|
|
|
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||||||||
Net Income |
$ |
5,336,342 |
|
|
$ |
1,208,316 |
|
|
$ |
6,072,534 |
|
|
$ |
2,265,666 |
|
Income tax expense |
|
1,265,288 |
|
|
|
325,936 |
|
|
|
1,451,021 |
|
|
|
620,950 |
|
Interest expense |
|
387,318 |
|
|
|
171,470 |
|
|
814,467 |
|
|
|
531,483 |
|
|
Depreciation and amortization |
|
637,566 |
|
|
|
414,656 |
|
|
|
2,004,641 |
|
|
|
826,077 |
|
EBITDA |
$ |
7,626,514 |
|
|
$ |
2,120,378 |
|
|
$ |
10,342,663 |
|
|
$ |
4,244,176 |
|
|
|
|
|
|
|
|
|
||||||||
Acquisition related costs |
|
90,230 |
|
|
|
106,346 |
|
|
|
347,780 |
|
|
|
342,074 |
|
CFO transition, ATM Costs and other strategic initiatives |
|
- |
|
|
|
186,436 |
|
|
|
104,977 |
|
|
|
379,229 |
|
Adjusted EBITDA |
$ |
7,716,744 |
|
|
$ |
2,413,160 |
|
|
$ |
10,795,420 |
|
|
$ |
4,965,479 |
|
Free Cash Flow |
||||||||||||||||
Three Months Ended |
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Six Months Ended |
||||||||||||||
March 31, |
|
March 31, |
||||||||||||||
|
2025 |
|
|
|
2024 |
|
|
|
2025 |
|
|
|
2024 |
|||
Operating Cashflow |
|
1,287,906 |
|
|
201,104 |
|
|
3,129,364 |
|
|
4,416,839 |
|
||||
Capital Expenditures |
|
|
1,555,651 |
|
|
|
125,730 |
|
|
|
1,817,015 |
|
|
|
308,648 |
|
Free Cashflow |
|
|
(267,745 |
) |
|
|
75,374 |
|
|
|
1,312,349 |
|
|
|
4,108,191 |
|
Net Debt and Net Debt Leverage |
||||||||
Three Months Ended March 31, |
||||||||
|
2025 |
|
|
|
2024 |
|
||
Total Debt |
|
$ |
27,401,323 |
|
|
$ |
10,642,885 |
|
Cash |
|
1,225,648 |
|
|
574,079 |
|
||
Net Debt |
|
$ |
26,175,675 |
|
|
$ |
10,068,806 |
|
Leverage Ratio |
1.4x |
0.8.x |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250514763735/en/
IR CONTACT
Paul Bartolai or Noel Ryan
ISSC@val-adv.com
Source: Innovative Solutions & Support, Inc.