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  About Innovative Solutions & Support, Inc.  Headquartered in Exton, Pa., Innovative Solutions & Support, Inc. ( 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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