Exhibit 99.1
Innovative Solutions & Support, Inc. Announces Results for Second Quarter 2006 and six months ended March 31, 2006
EXTON, Pa.—(BUSINESS WIRE)—Apr. 26, 2006—Innovative Solutions & Support, Inc. (NASDAQ:ISSC) today announced financial results for the second quarter and year-to-date periods ended March 31, 2006.
Total backlog at the end of the second quarter was $28.3 million, a 56% increase from $18.2 million at the end of the first quarter. The growth was the result of both Flat Panel Display System and Air Data orders. Flat Panel Display Systems backlog reached $16.3 million at quarter end, a 35% improvement from the first quarter and accounted for 57% of total company backlog for the quarter. Air Data backlog also grew nearly 100% to $12.1 million at the end of March, the highest level in the last four quarters.
New business orders have increased quarter over quarter for the past three quarters and in the first half of fiscal 2006 amounted to $24.5 million.
In the second quarter, Flat Panel Display System sales were $1 million, up from $0.3 million in the prior year’s second quarter. Total second quarter revenues were $3.7 million compared to $19.0 million in the prior year’s second quarter. For the six months ending March 31, 2006, Flat Panel Display System sales were $4.1 million, an increase from the prior year’s first half of more than 550%. Total revenues were $9.2 million compared to $40 million for the first six months of fiscal 2005, which benefited from RVSM compliance deadlines.
Roman Ptakowski, President of Innovative Solutions & Support, Inc., commented, “Our Flat Panel Display Systems business continues to gain momentum as evidenced by the upturn in sales as well as the record backlog level in the quarter. We continue to experience accelerating interest from an increasing variety of markets and our Flat Panel Systems strategy - targeting markets consisting of large numbers of aircraft, furthering our price leadership, and exploring partnerships and other alliances that can help drive growth – remains intact. At the same time, demand for our Air Data products improved reflecting replacement needs for aging aircraft. “
In the second quarter, the company reported a net loss of $(778,000) or $(0.04) per fully diluted share. This compared to $6.3 million of income or $0.34 per fully diluted share in the second quarter of fiscal 2005. The Company ended the period with $72.3 million of cash after purchasing 961,610 shares of its common stock at a cost of $13.7 million during the quarter. Please refer to the accompanying schedules highlighting our Statement of Operations and Balance Sheet.
Mr. Ptakowski continued, “Our revenues this quarter were impacted by a delay in the certification process with the FAA which, in turn, precluded us from shipping firm orders. The direction of our backlog, however, reflects the growing acceptance of our Flat Panel System in the marketplace and the ongoing demand for Air Data products. Despite the year over year revenue and earnings decline, the company still delivered gross margins in excess of 40% and continued to invest strongly in Flat Panel Display Systems, aircraft certification efforts and other products to ensure the company’s future.”
The company will host a conference call tomorrow morning, April 27, 2006 at 9:30 am local time (EST) to discuss these results as well as our business outlook. Please call in to participate at (888) 335-5539, conference ID# 7285267. Also, our web site (www.innovative-ss.com) will carry the conference call live and have it available for subsequent listening for a period of 30 days.
Headquartered in Exton, PA. Innovative Solutions & Support, Inc. (www.innovative-ss.com) is a systems integrator engaged in the design, manufacture and marketing of Flat Panel Display Systems, Air Data, Flight Information Computers, Engine and Fuel Measurement and Control Computers and advanced monitoring systems that measure and display critical flight information. This includes data relative to aircraft separation, airspeed and altitude as well as other instrument measurements.
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.
Contact Mr. James Reilly at (610) 646-9800
Innovative Solutions and Support, Inc.
Balance Sheet
| | March 31, 2006 | | September 30, 2005 | |
ASSETS | | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 72,252,681 | | $ | 83,172,582 | |
Accounts receivable | | 2,633,800 | | 5,479,936 | |
Inventories | | 4,307,417 | | 3,911,626 | |
Deferred income taxes | | 764,042 | | 956,070 | |
Prepaid expenses | | 2,433,037 | | 4,028,498 | |
Total current assets | | 82,390,977 | | 97,548,712 | |
| | | | | |
Property and equipment, net | | 9,179,698 | | 9,361,052 | |
| | | | | |
Other assets | | 347,114 | | 125,114 | |
| | | | | |
TOTAL ASSETS | | $ | 91,917,789 | | $ | 107,034,878 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Current portion of note payable | | $ | 100,000 | | $ | 100,000 | |
Current portion of capitalized lease obligation | | 7,891 | | 7,257 | |
Accounts payable | | 389,096 | | 305,516 | |
Accrued expenses | | 2,303,832 | | 3,503,814 | |
Deferred revenue | | 275,649 | | 176,650 | |
Total current liabilities | | 3,076,468 | | 4,093,237 | |
| | | | | |
Note payable | | 4,235,000 | | 4,235,000 | |
Capitalized lease obligation | | 8,574 | | 13,113 | |
Deferred revenue | | 156,227 | | 191,463 | |
Deferred income taxes | | 532,408 | | 635,967 | |
| | | | | |
SHAREHOLDERS’ EQUITY: | | | | | |
Common stock | | 18,063 | | 18,047 | |
Additional paid-in capital | | 42,481,545 | | 41,926,318 | |
Retained earnings | | 55,150,202 | | 55,921,733 | |
Treasury stock | | (13,740,698 | ) | — | |
Total shareholders’ equity | | 83,909,112 | | 97,866,098 | |
| | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 91,917,789 | | $ | 107,034,878 | |
Innovative Solutions and Support, Inc.
Statement of Operations
| | Three months ended | | Six months ended | |
| | March 31, | | March 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | |
Revenues | | $ | 3,744,752 | | $ | 19,001,021 | | $ | 9,150,139 | | $ | 37,979,825 | |
| | | | | | | | | |
Cost of Sales | | 2,194,718 | | 5,777,273 | | 4,896,736 | | 11,959,415 | |
| | | | | | | | | |
Gross profit | | 1,550,034 | | 13,223,748 | | 4,253,403 | | 26,020,410 | |
| | | | | | | | | |
Research and development | | 1,916,788 | | 1,548,468 | | 3,451,789 | | 2,819,999 | |
Selling, general and administrative | | 2,200,650 | | 2,303,928 | | 4,097,486 | | 4,332,395 | |
| | | | | | | | | |
Operating income (loss) | | (2,567,404 | ) | 9,371,352 | | (3,295,872 | ) | 18,868,016 | |
| | | | | | | | | |
Interest income | | 819,626 | | 428,325 | | 1,601,071 | | 711,575 | |
Interest expense | | (44,483 | ) | (39,395 | ) | (87,995 | ) | (79,134 | ) |
| | | | | | | | | |
Income (loss) before income taxes | | (1,792,261 | ) | 9,760,282 | | (1,782,796 | ) | 19,500,457 | |
| | | | | | | | | |
Income tax expense (benefit) | | (1,014,605 | ) | 3,486,443 | | (1,011,265 | ) | 7,033,815 | |
| | | | | | | | | |
Net Income (loss) | | $ | (777,656 | ) | $ | 6,273,839 | | $ | (771,531 | ) | $ | 12,466,642 | |
| | | | | | | | | |
Net Income (loss) per Common Share | | | | | | | | | |
Basic | | $ | (0.04 | ) | $ | 0.35 | | $ | (0.04 | ) | $ | 0.70 | |
Diluted | | $ | (0.04 | ) | $ | 0.34 | | $ | (0.04 | ) | $ | 0.68 | |
| | | | | | | | | |
Weighted Average Shares Outstanding | | | | | | | | | |
Basic | | 17,674,391 | | 17,781,957 | | 17,866,910 | | 17,766,965 | |
Diluted | | 17,674,391 | | 18,316,479 | | 17,866,910 | | 18,293,080 | |
