Innovative Solutions & Support, Inc. Announces Fourth Quarter and Fiscal 2012 Financial Results Business Wire EXTON, Pa. -- December 05, 2012 Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its financial results for the fourth quarter and full year fiscal 2012 ended September 30, 2012. Three Month Results For the fourth quarter, the Company reported revenue of $6.9 million, up 7% from revenue of $6.5 million in the fourth quarter of 2011. The Company reported fourth quarter 2012 net income of $2.8 million, or $0.17 per share, compared to $12,000, or $0.00 per share in the same quarter a year ago. For the fourth quarter, the Company generated positive operating cash flow of $1.3 million, up from $0.4 million in the fourth quarter of fiscal 2011. Of the reported net income and earnings per share, $2.4 million and $0.15, respectively, resulted from the reversal of income tax valuation allowances related to book to tax temporary differences and to research and development credits. The Company established the valuation allowances in 2008, following several years of losses, at which time the realization of certain deferred tax assets was considered unlikely in accordance with the requirements of ASC Topic 740 “Income Taxes”. Over the past several years, the Company has been profitable, and, in accordance with the requirements of ASC Topic 740, has concluded that, based upon an analysis of past results and future projections, the valuation allowances for certain deferred tax assets should be reversed. Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions & Support, Inc. (“ISSC”), said, “Revenues for the last three months of the year increased for the third consecutive quarter, which, together with continued operating efficiency, enabled us to achieve full year profitability for the fourth consecutive year. The results were accomplished while we were investing in new product development programs to leverage our core technology, expand our market opportunities, and increase our growth potential. Consequently, we not only ended fiscal 2012 in a strong financial position, but we entered fiscal 2013 with a more robust product portfolio and a larger addressable market. While economic uncertainty will present challenges to the health of our end markets in the near term, we are confident that the investments which we are making to strengthen the Innovative Solutions & Support franchise will create value for our shareholders over the longer term.” At September 30, 2012, the Company had $43.0 million of cash on hand and no debt. During the fourth quarter of the current fiscal year the Company used cash of approximately $107,000 to repurchase 31,221 shares of Company stock at an average cost of $3.44 per share. Backlog was approximately $19.7 million at September 30, 2012, compared to $23.0 million at June 30, 2012, and $27.5 million at September 30, 2011. For the year, new orders of $28.2 million exceeded sales of $24.6 million. Backlog at September 30, 2012 was net of $11.4 million of order reductions primarily by American Airlines. We expect backlog to improve in the future because of potential future sole source production sales resulting from the present customer-funded Engineering Modification and Development (“EMD”) contracts. Full Year Fiscal 2012 Results Revenues for the fiscal year ended September 30, 2012 were $24.6 million compared to $25.7 million for the twelve months ended September 30, 2011. Net income was $3.0 million, or $0.18 per share, for fiscal 2012 compared to $0.7 million, or $0.04 per share for the twelve months ended September 30, 2011. Of the reported net income and earnings per share, $2.4 million and $0.15, respectively, resulted from the reversal of the income tax valuation allowances that were discussed above. Cash flow from operating activities was $1.4 million for the twelve months ended September 30, 2012 compared to $2.3 million for the prior year. During fiscal 2012, the Company used $798,000 of cash to repurchase 211,722 shares of its stock at an average cost of $3.77 per share. Shahram Askarpour, President of ISSC, commented, “The profitability and positive cash flow generated in fiscal 2012 has provided us with additional resources to continue our development efforts and to leverage our expanding portfolio of products to gain share in our commercial air transport, military and general aviation markets. Eclipse Aerospace, Inc. has already placed an initial production order for one of our new products, our advanced avionics suite for their Eclipse 550 jet. In addition, we announced two new products that we are confident will be well received, our NextGen Cockpit/IP® II flight deck for business and general aviation aircraft, and our Integrated Multifunction Standby Unit for a variety of fixed wing aircraft and helicopters. Together with the progress that we are making in the development of our new System Integration and Cockpit Avionics, we continue to build our reputation for improving aircraft performance with dependable, high-quality products that offer owners an exceptional value proposition.” At the end of the quarter, the Company had $760,000 due from American Airlines. Based upon the present status of the bankruptcy proceedings, we are not able to determine the amount, if any, that could be uncollectible. Business Outlook For the fiscal year ending September 30, 2013, we expect to increase sales and generate profit, which would represent our fifth consecutive profitable year. Our ability to provide specific targets and ranges remains difficult as a result of the uncertain current economic climate; however, we are cautiously optimistic about results for 2013. We anticipate that sales will increase over 2012 sales; however, income before income taxes will not grow as fast as sales because of the continued high investment in lower margin EMD programs and in IR&D. We will provide additional commentary during our earnings conference call. Conference Call The Company will be hosting a conference call December 6, 2012 at 10:00 AM ET to discuss these results and its business outlook. Please use the following dial in number to register your name and company affiliation for the conference call: 877-883-0383 and enter the PIN Number 2640289. The call will also be carried live on the Investor Relations page of the Company web site atwww.innovative-ss.com. About Innovative Solutions & Support, Inc. Headquartered in Exton, Pennsylvania, 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 navigation resulting in low carbon footprint. 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 reflects 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 Statement of Operations (unaudited) Three months ended Twelve months ended September 30, September 30, 2012 2011 2012 2011 Sales $ 6,928,026 $ 6,490,277 24,578,198 25,737,652 Cost of Sales 4,259,701 3,324,155 14,067,933 11,945,184 Gross Profit 2,668,325 3,166,122 10,510,265 13,792,468 Operating expenses: Research and 560,741 1,181,696 2,693,554 5,500,924 development Selling, general and 1,734,578 1,889,470 7,400,199 7,683,637 administrative Total operating 2,295,319 3,071,166 10,093,753 13,184,561 expenses Operating 373,006 94,956 416,512 607,907 income Interest 38,521 24,202 101,012 143,942 income Interest (61 ) (297 ) (598 ) (1,509 ) expense Other income 6,489 - 65,005 150,010 Income before 417,955 118,861 581,931 900,350 income taxes Income tax (benefit) (2,355,174 ) 107,222 (2,397,063 ) 183,760 expense Net income $ 2,773,129 $ 11,639 $ 2,978,994 $ 716,590 Net income per Common Share Basic $ 0.17 $ 0.00 $ 0.18 $ 0.04 Diluted $ 0.17 $ 0.00 $ 0.18 $ 0.04 Weighted Average Shares Outstanding Basic 16,581,819 16,782,262 16,641,895 16,782,223 Diluted 16,581,819 16,811,629 16,641,900 16,824,621 Innovative Solutions and Support, Inc. Consolidated Statement of Operations (unaudited) September 30, September 30, 2012 2011 ASSETS Current Assets Cash and cash equivalents $ 42,977,501 $ 42,625,854 Accounts receivable, net 3,978,512 3,124,114 Inventories 3,801,547 3,508,595 Deferred income taxes 1,588,162 438,635 Prepaid expenses and other current assets 2,031,644 875,636 Total current assets 54,377,366 50,572,834 Property and equipment, net 7,214,378 7,476,362 Long term deferred income taxes 846,887 Other assets 158,600 208,408 Total Assets $ 62,597,231 $ 58,257,604 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of capitalized lease $ - $ 13,189 obligations Accounts payable 1,139,464 443,516 Accrued expenses 2,723,812 2,551,389 Deferred revenue 1,426,552 232,630 Total current liabilities 5,289,828 3,240,724 Long term deferred income taxes 128,998 566,963 Other liabilities 98,002 189,130 Total Liabilities 5,516,828 3,996,817 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 September 30, 2012 and 2011 Common stock, $.001 par value: 75,000,000 shares authorized, 18,329,314 and 18,329 18,287 18,286,884 issued at September 30, 2012 and 2011, respectively Additional paid-in capital 47,845,732 47,206,690 Retained earnings 29,605,236 26,626,242 Treasury stock, at cost, 1,756,632 and 1,544,910 shares at September 30, 2012 and (20,388,894 ) (19,590,432 ) 2011, respectively Total Shareholders' Equity 57,080,403 54,260,787 Total Liabilities and Shareholders' Equity $ 62,597,231 $ 58,257,604 Contact: Innovative Solutions & Support, Inc. Ron Albrecht, Chief Financial Officer 610-646-0350
Innovative Solutions & Support, Inc. Announces Fourth Quarter and Fiscal 2012 Financial Results
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