logo
Innovative Solutions & Support Reports Second Quarter 2025 Results

Innovative Solutions & Support Reports Second Quarter 2025 Results

Business Wire14-05-2025
EXTON, Pa.--(BUSINESS WIRE)--Innovative Solutions & Support, Inc. (Nasdaq: ISSC) ("IS&S" or the "Company"), a leading provider of advanced avionic solutions for commercial, business aviation and military markets, today reported fiscal second quarter financial results for the three-month period ended March 31, 2025.
SECOND QUARTER 2025 HIGHLIGHTS
(all comparisons versus the prior year period unless otherwise noted)
Net revenue of $21.9 million, +104%
Gross profit of $11.3 million; gross margin of 51.4%
Net Income of $5.3 million, or $.30 per diluted share
Adjusted EBITDA (1) of $7.7 million, +219 %
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.
Expand
MANAGEMENT COMMENTARY
'Our positive momentum carried over into the second quarter of fiscal 2025, with revenues more than doubling to $21.9 million and our adjusted EBITDA increasing by 219% to $7.7 million, compared to the same quarter last year' stated Shahram Askarpour, Chief Executive Officer of IS&S. 'The strong performance was driven by contributions from our F-16 product line and the air transport market.'
'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 30%,' continued Askarpour. 'We made further investments in infrastructure and systems to support our defense customers, and we continue to see meaningful opportunities to expand our military business. The expansion of our Exton facility, which will increase capacity more than threefold, remains on track for completion by mid-year. The integration of our recently acquired Honeywell products continues to progress, including the training of our workforce and integration of the F-16 products into our facility. These actions are critical components of our growth strategy and our progress this quarter keeps us on target to achieve our multi-year growth objectives.'
'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 $8.8 million, we remain in a strong financial position with ample liquidity to support our ongoing operations and facility expansion.'
'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 $21.9 million, an increase of 104% compared to the same period last year, driven by continued momentum in new military programs, contribution from the recently acquired Honeywell military product line and growth in the air transport market. Our results also included the benefit of some revenues related to the Honeywell military product lines that were pulled forward from future quarters. This quarter's results benefitted from a partial acceleration of production and sales of Honeywell's military product line in anticipation of Honeywell ceasing production at its own facilities and transitioning that production to the Company's facilities.
Gross profit was $11.3 million during the second quarter of 2025, up 102% from gross profit of $5.6 million in the second quarter of last year. The increase was driven by strong revenue growth and more favorable gross margins on the acquired products from Honeywell, and it was partially offset by investments in growth initiatives and higher depreciation expenses. As a result, in the second quarter of 2025, gross margin was 51.4%, down modestly from 52.0% during the second quarter of 2024, but up meaningfully from the 41.4% gross margin reported during 1Q25.
Second quarter 2025 operating expenses were $4.3 million, compared to $3.9 million in the second quarter of last year, reflecting incremental expenses from the Honeywell acquisitions, including $0.1 million of amortization expense, $0.1 million in employee related costs, and $0.1 million of acquisition and one-time expenses. Highlighting the opportunity for significant operating leverage as the business scales, operating expenses represented 19.6% of revenue during the second quarter, down meaningfully from 36.7% of revenues in the second quarter of last year.
Net income was $5.3 million, or $0.30 per diluted share during the second quarter, compared to net income of $1.2 million, or $0.07 per share in the second quarter of last year.
Adjusted EBITDA was $7.7 million during the second quarter, up from $2.4 million in the second quarter of last year.
New orders in the second quarter of fiscal 2025 were $20.8 million and backlog as of March 31, 2025, was $79.6 million. The backlog includes only purchase orders in-hand and excludes additional orders from the Company's OEM customers under long-term programs, including Pilatus PC-24, Textron King Air, Boeing T-7 Red Hawk, Boeing KC-46A, and Lockheed F-16.
BALANCE SHEET, LIQUIDITY AND FREE CASH FLOW
As of March 31, 2025, IS&S had total long-term debt of $27.4 million. Cash and cash equivalents as of March 31, 2025, were $1.2 million, resulting in net debt of $26.2 million. As of March 31, 2025, IS&S had total cash and availability under its credit line of approximately $8.8 million.
Cash flow provided by operations was $3.1 million during the six months ended March 31, 2025, compared to $4.4 million in the same period last year. Capital expenditures during the six months ended March 31, 2025 were $1.8 million, versus $0.3 million in the year-ago period. Free cash flow was $1.3 million during the six months ended March 31, 2025 versus $4.1 million in the same period last year.
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:
To listen to a replay of the teleconference, which will be available through May 29, 2025:
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 U.S. GAAP. Furthermore, the Company's definition of EBITDA may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA to U.S. GAAP net income.
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 Exton, Pa., Innovative Solutions & Support (IS&S) is a U.S.-based company specializing in the engineering, manufacturing, and supply of advanced avionic solutions. Its extensive global product reach and customer base span commercial, business and aviation and military markets, catering to both airframe manufacturers and aftermarket services for fixed-wing and rotorcraft applications. IS&S offers cutting-edge, cost-effective solutions while maintaining legacy product lines. The company is poised to leverage its experience to create growth opportunities in next-generation navigation systems, advanced flight deck and special mission displays, precise air data instrumentation, autothrottles, flight control computers, mission computers and software based situational awareness targeting autonomous flight. Supported by a robust portfolio of patents and the highest aircraft certification standards, IS&S is at the forefront of meeting the aerospace industry's demand for more sophisticated and technologically advanced products. For more information, please visit us at www.innovative-ss.com.
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 Exton facility; and the timing of long-term programs remaining in production and continuing to generate future sales. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions, 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, the Company's ability to efficiently integrate acquired and licensed product lines, including the Honeywell product lines, into its operations; a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; market acceptance and demand for our products and programs; and other factors that generally affect the economic and business environments in which the Company operates. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, and subsequent reports filed 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. 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.
(unaudited)
Three Months Ended
March 31,
Six Months Ended
March 31,
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
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
Operating expenses:
Selling, general and administrative
3,415,675
2,908,193
7,574,578
5,915,012
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
Net income per common share:
Diluted
$
0.30
$
0.07
$
0.34
$
0.13
Expand
Free Cash Flow
Three Months Ended
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
Expand
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
Expand
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Why did stocks tumble this week?
Why did stocks tumble this week?

Miami Herald

time28 minutes ago

  • Miami Herald

Why did stocks tumble this week?

The stock market had a tough week, with the S&P 500 and tech-stock-heavy Nasdaq retreating sharply on Thursday and Friday following a batch of concerning news on inflation, jobs, and tariffs. The S&P 500 fell 2.7% from an early-week high while the Nasdaq lost 3.9% of its value from its peak on Thursday. Here's why stocks retreated, and what could happen next. The stock market sell-off began in earnest following the Federal Reserve's controversial decision to keep interest rates at 4.25% to 4.5%. President Trump has advocated for Fed Chairman Jerome Powell to cut rates aggressively, recommending a 3% reduction. Related: Goldman Sachs revamps Fed interest rate cut forecast for 2025 Lower interest rates support stock prices because they increase household and business spending, fueling revenue and profit growth. Powell's reluctance to lower rates remains a headwind for stocks this year. Powell cited risks of tariffs driving inflation higher later this year and a "solid" economy for the decision to leave rates unchanged. Many viewed his hawkish tone during his press conference as an indication that rates may not get cut at the next meeting in September either. The decision drew the ire of President Donald Trump, who has previously called Chairman Powell "Mr. Too Late" and a "numbskull" for not already reducing interest rates. The President renewed his calls for Powell to resign following the Fed meeting. Despite White House pressure, the Fed's dual mandate targets low unemployment and inflation, which dictates its decisions on monetary policy. The Fed's mandate purposefully excludes political jawboning. Unfortunately, the Fed's dual goals are contradictory. While Fed rate cuts boost economic activity and lower unemployment, they increase inflation. The opposite is true when it raises rates. This dynamic often means that the Fed hesitates for fear of causing more economic problems than it solves. Unfortunately, that often means that the Fed falls behind the curve when setting interest rates at appropriate levels, forcing it to act more aggressively than it might otherwise because the economy has gotten too hot or cold. That chasing can lead to greater uncertainty, causing stock market volatility. The stock market's sell-off earlier in 2025 was primarily due to higher-than-expected import tariffs and the risk that they would boost inflation, zapping economic activity. Those worries fell when President Trump paused many tariffs on April 9, kickstarting a massive stock market rally that sent the S&P 500 and Nasdaq up over 28% and 38%, respectively. More Layoffs: Intel's recent layoffs take an unexpected turnWalmart makes more cuts customers won't likeLooking for a job? Job ads probably won't help you find one However, now that President Trump's tariff pause expired on August 1, he's announced new tariffs ranging from 10% to 41%, including a 35% tariff on Canada, up from 25%. Canada was our third-largest trading partner in 2024. The higher tariffs are problematic, given that they occur even as the impact of tariffs left in place earlier this year seems to be increasing inflation. The Personal Consumption Expenditures index showed inflation increased to 2.6% in June, up from 2.4% in May and 2.2% in April. The higher and faster inflation rises, the more likely business and household spending will shrink, dinging corporate revenue and earnings growth at publicly traded companies. The stock market was also hit by disappointing jobs data. Stocks perform best when the economy creates more jobs and wages grow, creating extra discretionary income. Related: Jobs report shocker resets Fed interest rate cut bets On Friday, the Bureau of Labor Statistics said the US economy only added 73,000 jobs in July, far fewer than the 100,000 expected and 147,000 in June. As a result, the unemployment rate increased to 4.24%, its highest level this cycle. Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed the number of open jobs fell to 7.4 million in June from 7.7 million in May. In case that wasn't concerning enough, Challenger, Gray & Christmas reported that US employers announced 62,075 layoffs in July, up 29% from June and 140% year over year. Stocks have had a remarkable rally, and it's not shocking that they might take a break. August is a notoriously weak month for stock market returns, and recent gains have lifted the S&P 500's forward price-to-earnings ratio, a key valuation measure, to lofty levels. According to FactSet, the S&P 500's forward P/E ratio was 22.4 on Friday, near the highs set in February before tariff announcements caused a sell-off, and up from about 19 in April, when stocks were near the lows. With valuation arguably rich and inflation and jobs uncertainty growing, stocks could experience more volatility than usual this month. Long-term investors are likely best off simply recognizing that pullbacks are common. According to Capital Group, a money manager with $2.2 trillion under management, the S&P 500 retreats 5% to 10% about once per year. Short-term investors may want to take a different approach, locking in recent gains and looking for lower entry points in the coming weeks. Related: Morgan Stanley resets S&P 500 target for 2026 The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

Elon Musk Warns of Losing Tesla Control, Denies Personal Loans Tied To Shares
Elon Musk Warns of Losing Tesla Control, Denies Personal Loans Tied To Shares

Yahoo

timean hour ago

  • Yahoo

Elon Musk Warns of Losing Tesla Control, Denies Personal Loans Tied To Shares

Elon Musk, the CEO of Tesla Inc. (NASDAQ:TSLA), has expressed concerns over potentially losing control of the electric vehicle giant due to the influence of activist shareholders. What Happened: Musk, who currently owns a 12.8% stake in Tesla, is apprehensive about being dethroned by shareholders who may not align with his vision for the company's future. He suggests that a 25% ownership stake would offer him adequate influence, while still leaving room for his possible removal. Musk's fears are rooted in past instances where shareholders voted in favor of a compensation package tied to the company's growth targets, only to be overruled by Delaware Chancery Court Judge Kathaleen McCormick. Earlier in January in a post on X, he shared that about 25 percent ownership stake would be enough "to be influential, but not so much that I can't be overturned.'Musk has the opportunity to acquire an additional 304 million shares, which would boost his voting control by roughly 4% post-tax. Also Read: Elon Musk Returns To Intense Work Schedule: 'Back To Working 7 Days a Week and Sleeping in the Office' In a recent statement on Friday on X, Musk affirmed that he has no personal loans against Tesla stock and reiterated his anxieties about being ousted by 'activist shareholders'. He expressed optimism that these concerns would be addressed at the forthcoming shareholders' are rumors that Musk may resign if his ownership stake is curtailed, akin to the limitations imposed on his pay package. Nonetheless, a majority of shareholders who endorsed Musk's pay package continue to support his leadership of Tesla's operations. Why It Matters: Musk's concerns highlight the potential power dynamics at play within Tesla's shareholder base. His potential loss of control could significantly impact the company's strategic direction, given his instrumental role in shaping Tesla's innovative trajectory. The upcoming shareholders' meeting will be a critical event, potentially determining the future of Musk's leadership at Tesla. Read Next Elon Musk Commits To Intense Focus on X/xAI and Tesla: 'Back To Spending 24/7 at Work, Sleeping in Conference/Server/Factory Rooms' Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? TESLA (TSLA): Free Stock Analysis Report This article Elon Musk Warns of Losing Tesla Control, Denies Personal Loans Tied To Shares originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

TransMedics Group, Inc. (TMDX): A Bull Case Theory
TransMedics Group, Inc. (TMDX): A Bull Case Theory

Yahoo

timean hour ago

  • Yahoo

TransMedics Group, Inc. (TMDX): A Bull Case Theory

We came across a bullish thesis on TransMedics Group, Inc. on Global Equity Briefing's Substack by Ray Myers. In this article, we will summarize the bulls' thesis on TMDX. TransMedics Group, Inc.'s share was trading at $118.97 as of July 31st. TMDX's trailing and forward P/E were 59.75 and 62.11 respectively according to Yahoo Finance. A surgeon in a modern operating theatre performing a transplant surgery with medical technology. TransMedics is revolutionizing the organ transplant ecosystem through its Organ Care System, a technology designed to keep organs warm, oxygenated, and viable far longer than traditional cold storage. By tackling key bottlenecks—organ degradation, low utilization rates, and logistical constraints—Organ Care System significantly extends transplant windows and boosts usage rates. Clinical trial data highlights its transformative potential: expanded criteria lungs and hearts saw utilization jump to 87% and 81%, respectively, while DCD heart use rose from 0% to 89%. TMDX monetizes this impact through a razor-and-blade model—selling Organ Care System consoles and high-margin, single-use consumables—while providing end-to-end services through its National Organ Care System Program, a SaaS-like Organs as a Service platform. With 21 private jets, 17 procurement hubs, and trained staff, TMDX handles organ retrieval, transport, and maintenance, positioning itself as a logistics powerhouse in the transplant chain. The opportunity is vast: U.S. underutilization alone represents a $400M+ annual consumables revenue potential, and TMDX currently serves just 3% of the $39B global market expected by 2034. Future growth catalysts include a kidney Organ Care System by 2029, entry into international markets via a $200M facility in Italy, and scaling the National Organ Care System Program globally. Financially, the company achieved profitability in 2024, posting $441M in revenue and positive operating cash flow, though free cash flow remains negative due to capex-heavy expansion. Trading at a P/E of 91, investor returns hinge on continued execution, EU rollout, and successful kidney platform launch. If goals are met, the stock could double by 2030, but slower expansion or margin compression may limit upside. Previously, we covered a on TransMedics Group, Inc. by Oliver | MMMT Wealth in May 2025, which highlighted warm perfusion technology, strong execution, and real-time flight data as revenue indicators. The company's stock appreciated ~24% since Q1 outperformance played out. Ray Myers shares a similar view but emphasizes the SaaS-like NOP model and global expansion potential. TransMedics Group, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held TMDX at the end of the first quarter which was 29 in the previous quarter. While we acknowledge the potential of TMDX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store