Exhibit 99.1
Press Release
Innovative Solutions & Support, Inc. Announces 86% Increase in 4th Quarter Net Income Versus Prior Year and 129% Ahead of Prior Quarter.
Company Delivers Record Sales, Record Net Income and Record Earnings/Share for the Fourth Quarter Ended September 30, 2003.
Exton, PA.—(BUSINESS WIRE)—November 18, 2003—Innovative Solutions & Support, Inc. (NASDAQ:ISSC-news) today announced record 4th quarter sales of $10.1 million and net income of $2.8 million. This strong 4th quarter performance produced fully diluted EPS of $0.23 that exceeded estimates. For the twelve months ended September 30, sales of $28.2 million and net income of $5.5 million produced fully diluted EPS of $0.44 that exceeded estimates.
Please refer to the accompanying schedules highlighting our Statement of Operations and Balance Sheet.
At September 30, 2003 the Company’s backlog of released business was a record $24.1 million. This reflects a 90% increase compared to September 30, 2002. In addition the Company has an additional $16 million in follow-on options for release in subsequent periods that has not yet been recognized in firm backlog.
At September 30, 2003, our cash position was $48.8 million or $4.06 per fully diluted share. During the year the Company acquired 1,440,026 shares of our stock at a cost of $9.4 million. Cumulatively, the Company has acquired 1,690,026 shares at a cost of $10.6 million.
The company will host a conference call today, November 18, at 10:00 am local time to discuss these results. Please call in to participate at (888) 792-8459. Also, our web site will carry the conference call live and have it available for subsequent listening.
The Company experienced solid performance this year that began slow but finished very strong. While revenue in total remained about the same year over year, it was more balanced within our three primary market segments this year. The Military segment amounted to $6.5 million or 23% of total revenue in the year, of which $1.1 million or 17% was in Flat Panel sales on two government multi-year programs. The Business, Regional and General Aviation and Air Transport segments each made a strong 2nd half recovery and finished the year with 42% and 35% of total revenue, respectively. Additionally, these two segments have shown significant growth in the form of new orders as evidenced with a record backlog of $22 million in commercial business alone.
Gross profit margins were solid all year and demonstrated how effective our manufacturing, assembly, test and quality operations have become. Our new manufacturing facility was put in place two years ago in anticipation of the broadening
application of RVSM requirements in the United States, including Southern Canada, and is capable of accommodating significant market demand increases.
The FAA has made it official; the Domestic Reduced Vertical Separation Minimum (DRVSM) mandate will be January 20, 2005. This requirement will have a positive impact on our business as the general aviation industry lines up to acquire the needed equipment. The FAA estimates the cost of implementation by airline and general aviation segments will be approximately $870 million but that fuel savings alone through 2016 will be six times the cost, saving $5.3 billion. We believe about one-half of the FAA’s cost estimate will be for hardware and that our Company is well positioned to maintain at least a 50% share in the retrofit market.
Headquartered in Exton, PA. Innovative Solutions & Support, Inc. (www.innovative-ss.com) designs, manufactures and markets flight information computers, large flat panel displays and advanced monitoring systems that measure and display critical flight information. This includes data relative to aircraft separation (RVSM, Reduced Vertical Separation Minimum), airspeed and altitude as well as engine and fuel measurements.
Certain matters discussed in this news release, including operating and financial results for future periods, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, either better or worse, from those discussed including other risks and uncertainties reflected in the Company’s prospectus and Form 10-K annual report on file with the SEC.
Contact Mr. James Reilly at (610) 646-9800
Innovative Solutions and Support, Inc.
Statement of Operations
| | | Three months ended September 30,
| | | Twelve months ended September 30,
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| | | 2002
| | | 2003
| | | 2002
| | | 2003
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Revenues | | $ | 7,227,377 | | | $ | 10,103,904 | | | $ | 28,345,620 | | | $ | 28,168,752 | |
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Cost of Sales | | | 2,834,164 | | | | 3,593,590 | | | | 11,290,085 | | | | 11,346,057 | |
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Gross profit | | | 4,393,213 | | | | 6,510,314 | | | | 17,055,535 | | | | 16,822,695 | |
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Research and development | | | 951,535 | | | | 952,702 | | | | 4,755,422 | | | | 3,376,849 | |
Selling, general and administrative | | | 1,400,208 | | | | 1,560,020 | | | | 5,732,886 | | | | 5,890,362 | |
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Operating income | | | 2,041,471 | | | | 3,997,592 | | | | 6,567,227 | | | | 7,555,484 | |
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Interest income | | | 209,387 | | | | 118,640 | | | | 855,995 | | | | 582,023 | |
Interest expense | | | (35,856 | ) | | | (29,922 | ) | | | (133,145 | ) | | | (131,602 | ) |
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Income before income taxes | | | 2,215,002 | | | | 4,086,310 | | | | 7,290,077 | | | | 8,005,905 | |
Income tax expense | | | 702,018 | | | | 1,271,022 | | | | 1,879,799 | | | | 2,464,715 | |
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Net Income | | $ | 1,512,984 | | | $ | 2,815,288 | | | $ | 5,410,278 | | | $ | 5,541,190 | |
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Net Income per Common Share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.12 | | | $ | 0.24 | | | $ | 0.42 | | | $ | 0.45 | |
Diluted | | $ | 0.12 | | | $ | 0.23 | | | $ | 0.41 | | | $ | 0.44 | |
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Weighted Average Shares Outstanding | | | | | | | | | | | | | | | | |
Basic | | | 12,801,020 | | | | 11,739,659 | | | | 12,830,894 | | | | 12,261,084 | |
Diluted | | | 13,033,339 | | | | 12,007,643 | | | | 13,069,387 | | | | 12,495,774 | |
Innovative Solutions and Support, Inc.
Balance Sheet
| | | Actual September 30, 2002
| | | Actual September 30, 2003
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ASSETS | | | | | | | | |
CURRENT ASSETS: | | | | | | | | |
Cash and cash equivalents | | $ | 52,245,754 | | | $ | 48,789,744 | |
Accounts receivable | | | 5,300,421 | | | | 6,955,207 | |
Inventories | | | 3,352,649 | | | | 2,840,648 | |
Deferred income taxes | | | 650,384 | | | | 673,134 | |
Prepaid expenses | | | 655,869 | | | | 660,430 | |
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Total current assets | | | 62,205,077 | | | | 59,919,163 | |
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Property and equipment, net | | | 10,144,895 | | | | 9,548,491 | |
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Other assets | | | 266,713 | | | | 408,971 | |
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TOTAL ASSETS | | $ | 72,616,685 | | | $ | 69,876,625 | |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
Current portion of note payable | | $ | 100,000 | | | $ | 100,000 | |
Current portion of capitalized lease obligation | | | 17,111 | | | | — | |
Accounts payable | | | 246,814 | | | | 578,306 | |
Accrued expenses | | | 2,544,909 | | | | 3,146,409 | |
Deferred revenue | | | 137,936 | | | | 98,036 | |
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Total current liabilities | | | 3,046,770 | | | | 3,922,751 | |
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Note Payable | | | 4,235,000 | | | | 4,235,000 | |
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Deferred revenue | | | 402,877 | | | | 332,407 | |
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Deferred income taxes | | | 205,828 | | | | 328,177 | |
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SHAREHOLDERS’ EQUITY: | | | | | | | | |
Common stock | | | 13,052 | | | | 13,081 | |
Additional paid-in capital | | | 46,093,605 | | | | 46,248,224 | |
Retained earnings | | | 19,869,553 | | | | 25,410,742 | |
Treasury Stock | | | (1,250,000 | ) | | | (10,613,757 | ) |
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Total shareholders’ equity | | | 64,726,210 | | | | 61,058,290 | |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 72,616,685 | | | $ | 69,876,625 | |
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