UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2018
INNOVATIVE SOLUTIONS AND SUPPORT, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania |
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0-31157 |
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23-2507402 |
(State or other jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer |
720 Pennsylvania Drive |
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Exton, Pennsylvania |
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19341 |
(Address of principal executive offices) |
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(Zip Code) |
(610) 646-9800
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On May 9, 2018, Innovative Solutions and Support, Inc. (the Company) issued a press release announcing its financial results for its fiscal second quarter ended March 31, 2018. A copy of that press release and the attached financial schedules are attached as Exhibit 99.1 to this report and incorporated herein by reference.
The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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Description |
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99.1 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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INNOVATIVE SOLUTIONS AND SUPPORT, INC. | |
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Date: May 10, 2018 |
By: |
/s/ Relland M. Winand |
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Relland M. Winand |
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Chief Financial Officer |
Contact:
Innovative Solutions & Support, Inc.
Relland Winand
Chief Financial Officer
610-646-0350
rwinand@innovative-ss.com
Innovative Solutions & Support, Inc. Announces Second Quarter Fiscal 2018 Financial Results
Exton, PA. May 9, 2018 Innovative Solutions & Support, Inc. (IS&S or the Company) (ISSC) today announced its financial results for the second quarter of fiscal 2018 ended March 31, 2018.
For the second quarter of fiscal 2018, the Company reported net sales of $3.7 million, compared to second quarter fiscal 2017 sales of $4.7 million. The Company reported a net loss of $1.3 million, or ($0.08) per share, for the second quarter of 2018 compared to net income of $5.9 million, or $0.35 per share, in the second quarter a year ago. Second quarter 2017 profitability benefitted from a $3.6 million reduction to selling, general and administrative expenses as well as $4.1 million in other income, both arising from the settlement of a lawsuit.
Geoffrey Hedrick, Chairman and Chief Executive Officer of IS&S, said, We continue to invest in new product research and development which we believe will enable the Company to sustain growth over the long term. These efforts yielded our second STC in just the last few quarters; a standalone Autothrottle for the PC-12 that can be installed and operated without upgrading the cockpit display system,
thereby proving a highly cost-effective upgrade solution. Work has begun on the development of a standalone Autothrottle for the King Air, which we believe can greatly expand our total market opportunity for Autothrottle. We expect that it should be a straightforward task to complete the development and obtain an STC on the King Air, which would then make IS&S the sole source for a standalone Autothrottle for this aircraft. In the near term we continue to focus on our strategy to increase both revenues and backlog.
Subsequent to March 31, 2018, the company intends to use $2.4 million of cash to acquire a King Air airplane to be used in research and development activities.
At March 31, 2018, the Company had $23.4 million of cash on hand.
New orders in the second quarter of fiscal 2018 were $4.2 million and backlog as of March 31, 2018 was $3.8 million. Backlog excludes potential future sole-source production orders from products in development under the Companys engineering development contracts, including 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 respective development phases. The Company expects that these contracts will add to production sales already in backlog.
Shahram Askarpour, President of IS&S, added, The increase in both revenues and backlog in the second quarter is consistent with our expectation for steady improvement compared to the first quarter. The number of aircraft benefitting from our many products is increasing. Consequently, we continue to see an increase in repeat, intra-quarter book-and-ship business from customers, as well as solid demand for customer service arising as our installed base of products expands.
Over the last several quarters we have maintained our commitment to research and development, which has enabled us to introduce a number of new products, including the first Autothrottle for turboprops integrated with our display system, and now a standalone Autothrottle. We are confident that our strategy to develop innovative technologies that improve safety, situational awareness and reduce the cost of operation is building long-term shareholder value.
Six Months Results
Total sales for the six months ended March 31, 2018 were $6.8 million, compared to $ 8.0 million for the six months ended March 31, 2017. For the six months ended March 31, 2018, the net loss was $2.2 million compared to net income of $4.7 million for the first half of fiscal 2017. Six months results for fiscal 2017 reflect the unusual items recognized in the second quarter as described above.
Conference Call
The Company will be hosting a conference call on Thursday, May 10, 2018 at 10:00 a.m. 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 2478592. The call will also be carried live on the Investor Relations page of the Company web site at www.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 (OEMs) 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 Companys future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect managements 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.
TABLES TO FOLLOW
Innovative Solutions and Support, Inc.
Consolidated Balance Sheets
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March 31, |
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September 30, |
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2018 |
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2017 |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
23,438,543 |
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$ |
24,680,301 |
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Accounts receivable |
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2,373,627 |
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2,748,597 |
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Unbilled receivables |
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926,629 |
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1,480,822 |
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Inventories |
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4,440,542 |
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4,179,654 |
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Prepaid expenses and other current assets |
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951,249 |
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1,092,064 |
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Total current assets |
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32,130,590 |
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34,181,438 |
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Property and equipment, net |
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6,588,808 |
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6,669,011 |
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Other assets |
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185,700 |
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187,315 |
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Total assets |
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$ |
38,905,098 |
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$ |
41,037,764 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
1,390,535 |
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$ |
1,321,251 |
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Accrued expenses |
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1,554,859 |
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1,760,037 |
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Deferred revenue |
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220,245 |
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280,354 |
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Total current liabilities |
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3,165,639 |
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3,361,642 |
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Non-current deferred income taxes |
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129,574 |
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67,742 |
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Total liabilities |
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3,295,213 |
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3,429,384 |
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Commitments and contingencies (See Note 6) |
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Shareholders equity |
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Preferred stock, 10,000,000 shares authorized, $.001 par value, of which 200,000 shares are authorized as Class A Convertible stock. No shares issued and outstanding at March 31, 2018 and September 30, 2017 |
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$ |
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$ |
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Common stock, $.001 par value: 75,000,000 shares authorized, 18,937,050 and 18,879,580 issued at March 31, 2018 and September 30, 2017, respectively |
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18,937 |
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18,880 |
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Additional paid-in capital |
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51,783,779 |
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51,583,841 |
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Retained earnings |
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5,175,706 |
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7,374,196 |
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Treasury stock, at cost, 2,096,451 shares at March 31, 2018 and September 30, 2017 |
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(21,368,537 |
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(21,368,537 |
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Total shareholders equity |
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35,609,885 |
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37,608,380 |
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Total liabilities and shareholders equity |
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$ |
38,905,098 |
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$ |
41,037,764 |
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Innovative Solutions and Support, Inc.
Consolidated Statements of Operations
(unaudited)
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Three months ended |
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Six months ended |
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March 31, |
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March 31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Gross sales |
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$ |
3,727,204 |
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$ |
4,751,731 |
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$ |
6,815,188 |
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$ |
8,575,778 |
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Returns and allowances |
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(97,829 |
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(556,009 |
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Net Sales |
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3,727,204 |
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4,653,902 |
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6,815,188 |
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8,019,769 |
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Cost of sales |
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2,082,347 |
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2,302,431 |
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3,675,616 |
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4,130,483 |
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Gross profit |
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1,644,857 |
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2,351,471 |
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3,139,572 |
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3,889,286 |
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Operating expenses: |
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Research and development |
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1,031,622 |
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1,069,009 |
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1,955,343 |
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2,154,997 |
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Selling, general and administrative |
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1,756,746 |
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(1,703,456 |
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3,379,301 |
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343,666 |
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Total operating expenses |
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2,788,368 |
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(634,447 |
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5,334,644 |
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2,498,663 |
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Operating (loss) income |
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(1,143,511 |
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2,985,918 |
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(2,195,072 |
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1,390,623 |
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Interest income |
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11,681 |
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9,947 |
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21,305 |
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19,823 |
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Other income |
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15,664 |
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4,140,210 |
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37,096 |
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4,159,326 |
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(Loss) income before income taxes |
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(1,116,166 |
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7,136,075 |
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(2,136,671 |
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5,569,772 |
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Income tax expense |
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200,705 |
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1,205,650 |
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61,819 |
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834,319 |
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Net (loss) income |
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$ |
(1,316,871 |
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$ |
5,930,425 |
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$ |
(2,198,490 |
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$ |
4,735,453 |
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Net loss per common share: |
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Basic |
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$ |
(0.08 |
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$ |
0.35 |
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$ |
(0.13 |
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$ |
0.28 |
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Diluted |
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$ |
(0.08 |
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$ |
0.35 |
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$ |
(0.13 |
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$ |
0.28 |
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Weighted average shares outstanding: |
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Basic |
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16,800,244 |
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16,735,503 |
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16,791,687 |
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16,725,759 |
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Diluted |
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16,800,244 |
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16,847,059 |
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16,791,687 |
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16,835,756 |
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