Innovative Solutions and Support Reports 71.6% Revenue Growth to $15.97 Million

Innovative Solutions and Support, Inc. (IS&S) reported significant financial growth in its latest quarterly results, with net sales for the three months ended December 31, 2024, reaching $15.97 million, a 71.6% increase from $9.31 million in the same period last year. This surge was primarily driven by a 125.7% increase in product sales, which amounted to $9.98 million, largely attributed to the recent acquisition of military product lines from Honeywell, contributing $6 million. Service sales also saw a notable rise of 22.5%, totaling $5.98 million, reflecting increased engineering development services and customer service sales from the newly acquired product lines.

Despite the revenue growth, the company's cost of sales rose significantly, totaling $9.36 million, or 58.6% of net sales, compared to $3.78 million, or 40.7% of net sales, in the prior year. This increase in costs was linked to higher sales volumes and changes in product mix, resulting in a gross margin decline to 41.4% from 59.3%. The company attributed this decrease to several factors, including increased depreciation from recent acquisitions and the lower margins associated with military product sales.

In terms of operational developments, IS&S has been actively expanding its product offerings through strategic acquisitions. The company completed three significant transactions with Honeywell, including a $14.2 million agreement in September 2024 for military display generators and flight control computers, and a $4.2 million acquisition in July 2024 for communication and navigation product lines. These acquisitions are expected to enhance IS&S's capabilities in the aerospace market and provide potential cost synergies through better utilization of its engineering resources.

As of December 31, 2024, IS&S reported total assets of $81.25 million, a slight decrease from $82.38 million at the end of the previous quarter. The company’s cash and cash equivalents increased to $604,561 from $538,977, while accounts receivable decreased significantly to $7.72 million from $12.61 million. The company’s backlog also decreased to $80.76 million from $89.23 million, reflecting ongoing sales activity and the recognition of revenue from existing contracts.

Looking ahead, IS&S remains optimistic about its growth trajectory, bolstered by its recent acquisitions and a strong backlog of contracts. The company anticipates that approximately 65% of its backlog will be recognized as revenue over the next 12 months, with 98% expected to be recognized within 24 months. Management believes that the strategic acquisitions will not only enhance its product offerings but also improve its market position in the aerospace sector, supporting continued revenue growth in the coming quarters.