Innovative Solutions & Support, Inc. Announces Second Quarter Fiscal 2013 Financial Results

  Innovative Solutions & Support, Inc. Announces Second Quarter Fiscal 2013
  Financial Results

       Revenue up 21%, Net Income increases over $800,000 from year ago

New Orders - Including Delta - of $69 Million Increase Current Backlog to Over
                                 $90 Million

   Company Raises Outlook, Now Expects Fiscal 2013 Revenues to Increase 30%

Business Wire

EXTON, Pa. -- April 24, 2013

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its
financial results for the second quarter of fiscal 2013, ended March 31, 2013.

For the second quarter of 2013, the Company reported revenue of $8.2 million,
a 21 percent increase compared to the second quarter fiscal 2012 revenue of
$6.8 million. The Company reported second quarter 2013 net income of $1.1
million, or $0.07 per diluted share, compared to net income of $289,000, or
$0.02 per diluted share, in the same quarter a year ago.

Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions
& Support, Inc. (“ISSC”) said, “In the second quarter, we achieved our
strategic objectives, profitably growing the business and signing new
contracts that should provide a solid foundation on which to build over the
next several years. During the first half of this year, we have been awarded
more than $85 million in new orders, highlighted by the contract to upgrade
Delta’s MD 88 and MD 90 fleet. This contract not only adds substantially to
our backlog, but also is another in a series of market validations of our
growing portfolio of advanced technologies, in this case, our Next Generation
Flight Management System. By focusing on developing new products, we can offer
a compelling value proposition to our customers and capitalize on the market’s
increasing emphasis on price-for-performance. With other new products in
development, we will integrate a number of systems in the cockpit for both
retrofit and OEM markets. We believe that our strategy to invest a substantial
portion of our resources in research and development will create value for
shareholders by growing revenues, profits, and cash flows over the next
several years.”

At March 31, 2013, the Company had $16.3 million of cash on hand and no debt.
The cash position is net of approximately $25 million paid to shareholders as
a special dividend in December 2012.

Six Months Revenues up 28%

Revenues for the six months ended March 31, 2013 were $14.8 million, compared
to $11.5 million for the six months ended March 31, 2012. Net income for the
six months ended March 31, 2013 was $1.4 million, or $0.09 per diluted share,
compared to a net loss of $54,000, or $0.00 per diluted share, for the first
half of last fiscal year.

Second Quarter orders of $69 million increase backlog to over $90 million

Orders for the second quarter were $69 million, including the $62 million
Delta contract, increasing backlog at March 31, 2013 to over $90 million from
$29 million at December 31, 2012. Production deliveries on the Delta contract
are expected to begin in mid 2014 and to extend over several years. Backlog
excludes potential future sole-source production orders from products
currently in development under the Company’s development contracts, including
two new general aviation aircraft, one of which is the previously announced
Eclipse 550, on which orders are expected to extend over the next decade.

Shahram Askarpour, President of ISSC, commented, “This was a strong quarter,
highlighted by the award of the contract to upgrade Delta’s MD88/90 fleet.
With this contract, our advanced Flight Management System and Global
Positioning System Receivers have now been selected in all three market
segments: the B-737, MD88/90 in the air transport market, the C-130 and L-100
in the military market, and the Eclipse E500 and E550 in the general aviation
market. Our flight management systems are among the industry’s most advanced
aircraft performance and navigation solutions, and provide cost-effective,
state-of-the-art technology, which enables legacy avionics platforms to be
upgraded with the capabilities, efficiency, and performance similar to the
latest production aircraft, including offering valuable NextGen
functionality.”

He continued, “These platforms are extremely versatile, and provide a strong
foundation to add additional aircraft types in each of our markets,
substantially increasing our addressable market. Continued economic
uncertainty has placed a premium on products that provide operators the best
price-to-performance value. For over 25 years, IS&S has built its reputation
as an industry leader with dependable, high-quality products that deliver high
performance at a much lower cost than our competitors’ offerings. We are very
pleased that this unwavering commitment is getting increased market
recognition.”

Business Outlook

Mr. Hedrick concluded, “For the fiscal year ending September 30, 2013, we
expect revenues to increase approximately 30% compared to fiscal 2012.
Continued investment in product development to support our double digit growth
will limit earnings from these increased revenues. Revenues and earnings from
the production phases of several of these development efforts, including the
Delta Airlines MD88/90 order, will begin in fiscal 2014. We estimate that
earnings per share for fiscal 2013 will be in the range of $0.18 to $0.20.
This estimate compares to earnings per share for fiscal 2012 of $0.03 plus a
non-recurring benefit of $0.15 related to a tax valuation reserve adjustment.”

Conference Call

The Company will be hosting a conference call April 25, 2013 at 10:00 AM ET to
discuss these results and its business outlook. Those planning to dial in to
the call should dial the following number and register their names and company
affiliations: 877-883-0383, and enter the PIN Number 8021693. 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, 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 (OEM’s) and retrofit applications. The company supplies
integrated Flight Management Systems (FMS) 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 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 Balance Sheet
(unaudited)
                                                               
                                           March 31,           September 30,
                                           2013                2012
ASSETS
Current Assets
Cash and cash equivalents                  $ 16,324,325        $ 42,977,501
Accounts receivable, net                     5,907,328           3,978,512
Inventories                                  3,912,131           3,801,547
Deferred income taxes                        1,994,613           1,588,162
Prepaid expenses and other current          4,405,173         2,031,644   
assets
                                                               
Total current assets                         32,543,570          54,377,366
                                                               
Property and equipment, net                  7,150,754           7,214,378
Non-current deferred income taxes            548,319             846,887
Other assets                                129,800           158,600     
                                                               
Total Assets                               $ 40,372,443       $ 62,597,231  
                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                               
Current Liabilities
Accounts payable                           $ 1,718,863         $ 1,139,464
Accrued expenses                             2,813,942           2,723,812
Deferred revenue                            905,169           1,426,552   
                                                               
Total current liabilities                    5,437,974           5,289,828
                                                               
Deferred income taxes                        129,953             128,998
Other liabilities                           113,016           98,002      
                                                               
Total Liabilities                           5,680,943         5,516,828   
                                                               
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 March 31,          -                   -
2013 and September 30, 2012

Common stock, $.001 par value:
75,000,000 shares authorized,
18,533,904 and
18,329,314 issued at March 31, 2013          18,534              18,329
and September 30, 2012, respectively
                                                                 
Additional paid-in capital                   49,040,122          47,845,732
Retained earnings                            6,022,435           29,605,236
Treasury stock, at cost, 1,756,807 and
1,756,632 shares at March 31, 2013 and
September 30, 2012, respectively            (20,389,591 )      (20,388,894 )
                                                               
Total Shareholders' Equity                  34,691,500        57,080,403  
                                                               
Total Liabilities and Shareholders'        $ 40,372,443       $ 62,597,231  
Equity
                                                               

                                                                 
Innovative Solutions and Support, Inc.
Consolidated Statement of Operations
(unaudited)
                
                   Three months ended                  Six months ended
                   March 31                            March 31,
                   2013             2012               2013             2012
                                                                        
Sales              $ 8,214,974      $ 6,760,221        $ 14,751,708     $ 11,515,680
                                                                        
Cost of Sales       4,263,580       3,659,505        7,760,063       6,289,365  
                                                                        
Gross Profit         3,951,394        3,100,716          6,991,645        5,226,315
                                                                        
Operating
expenses:
Research and         805,126          926,379            1,655,978        1,716,602
development
Selling,
general and         1,935,431       1,827,794        3,740,240       3,821,369  
administrative
Total
operating            2,740,557        2,754,173          5,396,218        5,537,971
expenses
                                                                        
Operating            1,210,837        346,543            1,595,427        (311,656   )
income
                                                                        
Interest             6,181            20,156             23,753           41,935
income
Interest             -                (180       )       -                (417       )
expense
Other income        13,261          8,568            24,806          50,637     
                                                                        
Income before        1,230,279        375,087            1,643,986        (219,501   )
income taxes
                                                                        
Income tax          123,151         86,214           219,271         (165,395   )
expense
                                                                        
Net (loss)         $ 1,107,128      $ 288,873         $ 1,424,715      $ (54,106    )
income
                                                                        
Net (loss)
income per
Common Share
Basic              $ 0.07           $ 0.02            $ 0.09           $ (0.00      )
Diluted            $ 0.07           $ 0.02            $ 0.09           $ (0.00      )
                                                                        
Weighted
Average Shares
Outstanding
Basic                16,776,924       16,636,725         16,692,715       16,679,109
Diluted              16,781,756       16,636,732         16,695,135       16,679,109
                                                                        

Contact:

Innovative Solutions & Support, Inc.
Ronald C. Albrecht, Chief Financial Officer
610-646-0350
 
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