Innovative Solutions & Support, Inc. Announces Second Quarter Fiscal 2014 Financial Results

  Innovative Solutions & Support, Inc. Announces Second Quarter Fiscal 2014
  Financial Results

                          Sales up 52% from year ago

Business Wire

EXTON, Pa. -- April 23, 2014

Innovative Solutions & Support, Inc. (NASDAQ: ISSC) today announced its
financial results for the second quarter of fiscal 2014, ended March 31, 2014.

For the second quarter of fiscal 2014, the Company reported sales of $12.5
million, a 52 percent increase compared to sales of $8.2 million for the
second quarter of fiscal 2013. The Company reported second quarter 2014 net
income of $0.8 million, or $0.05 per diluted share, compared to second quarter
2013 net income of $1.1 million, or $0.07 per diluted share.

Geoffrey Hedrick, Chairman and Chief Executive Officer of Innovative Solutions
& Support, Inc. (“ISSC”) said, “Sales, margins and profits continue to be
consistent with our goals for fiscal 2014. We are pleased with the growth of
our production sales, which are generating gross margins similar to our
historical experience of approximately 50%.” Quarterly engineering sales were
a record $4.4 million.

At March 31, 2014, the Company had $15.3 million of cash on hand and remained
debt-free. Cash used in operating activities for the quarter was $585,000
compared to cash used of $222,000 in the first quarter of fiscal 2014.

Net orders for the quarter were $6.7 million, and backlog at March 31, 2014
was $80.9 million. The backlog includes a large contract with Delta Airlines,
on which the Company anticipates beginning initial production deliveries this
fiscal year.  Backlog excludes potential future sole-source production orders
from products in development under the Company’s engineering development
contracts, including the Eclipse 550, the Pilatus PC-24, and the KC-46A, all
of which the Company expects to remain in production for a decade following
completion of their development phases. The Company expects that these
sole-source contracts will add to production sales already in backlog.

Six Months Results

Total sales for the six months ended March 31, 2014 were $23.6 million, up 59
percent year over year. Production sales for the six months ended March 31,
2014 were $15.8 million, up 36% from the comparable prior year period. Net
income for the six months ended March 31, 2014 was $1.8 million, up 29%
compared to $1.4 million year over year. Earnings per share for the six months
ended March 31, 2014 were $0.10 per diluted share, up 11%, compared to $0.09
per diluted share for the first half of the last fiscal year.

Shahram Askarpour, President of ISSC, commented, “We are pleased with our
overall performance and with the growth of our production volumes as certain
engineering development programs begin to transition to production. The
Eclipse program is now in production, and we expect the Delta program to enter
production later this year. In anticipation of the sales growth, we have
strengthened our organization to complete our engineering development program
milestones and to manage the growth in production.”

Mr. Hedrick concluded, "The increase in production volumes of existing
products and the progress in the development of new products are evidence of
the success of our price-for-performance strategy. Consequently, we intend to
continue engineering investments, which totaled in excess of 35% of sales in
the first six months of this fiscal year, so that we can offer a growing
portfolio of both OEM and retrofit flight management systems, GPS sensors, and
other NextGen air traffic control products to the commercial air transport,
military and general aviation markets."

Business Outlook

For the fiscal year ending September 30, 2014, IS&S expects to increase sales,
operating income, and net income compared to fiscal 2013 and to report its
sixth consecutive profitable year, characterized by growing production volume
resulting from its engineering investments. The Company will provide
additional commentary during its earnings conference call.

Conference Call

The Company will be hosting a conference call April 24, 2014 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: 1-877-883-0383 and enter the PIN Number 2335376. 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 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
                                                          
                                           March 31,           September 30,
                                           2014                2013
                                           (unaudited)
ASSETS
Current Assets
Cash and cash equivalents                  $ 15,284,341        $ 16,386,207
Accounts receivable                          6,873,223           4,489,434
Unbilled receivables                         8,260,342           6,539,442
Inventories                                  5,405,373           4,377,513
Deferred income taxes                        1,989,173           2,002,679
Prepaid expenses and other current          664,457           642,210     
assets
                                                                             
Total current assets                         38,476,909          34,437,485
                                                                             
Property and equipment, net                  7,572,668           7,320,495
Non-current deferred income taxes            86,064              650,998
Other assets                                231,980           221,533     
                                                                             
Total Assets                               $ 46,367,621       $ 42,630,511  
                                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                             
Current Liabilities
Accounts payable                           $ 3,668,659         $ 2,372,137
Accrued expenses                             3,968,442           3,672,909
Deferred revenue                            287,718           447,525     
                                                                             
Total current liabilities                    7,924,819           6,492,571
                                                                             
Deferred income taxes                        132,601             132,202
Other liabilities                           11,665            11,491      
                                                                             
Total Liabilities                           8,069,085         6,636,264   
                                                                             
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, 2014 and
September 30, 2013
                                                                 -
Common stock, $.001 par value:
75,000,000 shares authorized,
18,701,004 and 18,632,328 issued at          18,701              18,632
March 31, 2014 and September 30, 2013,
respectively
                                                                 -
Additional paid-in capital                   50,391,978          49,880,571
Retained earnings                            8,277,447           6,484,634
Treasury stock, at cost, 1,756,807 and
1,756,807 shares at March 31, 2014 and      (20,389,590 )      (20,389,590 )
September 30, 2013, respectively
                                                                             
Total Shareholders' Equity                  38,298,536        35,994,247  
                                                                             
Total Liabilities and Shareholders'        $ 46,367,621       $ 42,630,511  
Equity
                                                                             


Innovative Solutions and Support, Inc.
Consolidated Statements of Income
(unaudited)
                                                             
                   Three months ended                Six months ended
                   March 31,                         March 31,
                   2014             2013             2014             2013
                                                                        
Net Sales          $ 12,495,016     $ 8,214,974      $ 23,600,827     $ 14,751,708
                                                                        
Cost of Sales       8,709,891       4,263,580       16,035,266      7,760,063
                                                                        
Gross Profit         3,785,125        3,951,394        7,565,561        6,991,645
                                                                        
Operating
expenses:
Research and         660,876          805,126          1,287,797        1,655,978
development
Selling,
general and         2,034,609       1,935,431       3,779,500       3,740,240
administrative
Total
operating            2,695,485        2,740,557        5,067,297        5,396,218
expenses
                                                                        
Operating            1,089,640        1,210,837        2,498,264        1,595,427
income
                                                                        
Interest             5,299            6,181            10,965           23,753
income
Other income        8,901           13,261          19,368          24,806
                                                                        
Income before        1,103,840        1,230,279        2,528,597        1,643,986
income taxes
                                                                        
Income tax          319,623         123,151         735,784         219,271
expense
                                                                        
Net income         $ 784,217        $ 1,107,128      $ 1,792,813      $ 1,424,715
                                                                        
Net income per
common share
Basic              $ 0.05           $ 0.07           $ 0.11           $ 0.09
Diluted            $ 0.05           $ 0.07           $ 0.10           $ 0.09
                                                                        
Cash dividends     $ -              $ -              $ -              $ 1.50
per share:
                                                                        
Weighted
average shares
outstanding
Basic                16,915,823       16,776,924       16,901,955       16,692,715
Diluted              17,152,678       16,781,756       17,123,512       16,695,135
                                                                        

Contact:

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