In This Article:
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Net Income: $7 million, up 16% from the prior year.
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EBITDA: Approximately $12 million, up 36% from the prior year.
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Revenue Growth: More than 18% year-over-year growth in the fourth quarter.
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Fourth Quarter Net Revenues: $15.4 million, up 18% compared to the previous year.
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Product Sales: $9.8 million during the fourth quarter.
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Customer Service Revenue: $5.5 million in the fourth quarter.
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Gross Profit: $8.5 million during the fourth quarter.
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Research and Development Expense: $1.1 million in the fourth quarter.
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Selling, General and Administrative Expenses: $3.1 million in the fourth quarter.
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Fourth Quarter Net Income: $3.2 million or $0.18 per diluted share.
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Adjusted EBITDA: $5.6 million during the fourth quarter.
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New Orders: $95.4 million in the fourth quarter.
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Backlog: $89.2 million as of September 30, 2024.
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Cash Flow from Operations: $5.8 million for fiscal 2024.
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Capital Expenditures: $700,000 during fiscal 2024.
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Free Cash Flow: $5.1 million for the full year 2024.
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Total Net Debt: $27.5 million as of September 30, 2024.
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Net Leverage: 2x at the end of the fourth quarter.
Release Date: December 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Innovative Solutions and Support Inc (NASDAQ:ISSC) reported significant year-over-year growth in revenue, net income, EBITDA, and free cash flow for fiscal 2024.
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The company achieved an 18% year-over-year increase in revenue during the fourth quarter, driven by new military programs and recently acquired platforms.
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ISSC introduced a long-term value creation strategy, IS&S Next, focusing on targeted commercial growth, improved operating leverage, and disciplined capital allocation.
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The company successfully integrated and realized synergies from recent Honeywell product line acquisitions, enhancing cross-selling opportunities.
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ISSC plans to increase manufacturing capacity by more than 100% through a $6 million facility expansion, supporting future growth and operational efficiency.
Negative Points
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Gross margins are expected to trend closer to mid-50% on a normalized basis due to incremental depreciation and amortization from recent acquisitions and a shift in sales mix towards lower-margin military sales.
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The company faces ongoing margin headwinds from recent product line acquisitions, impacting gross margin capture.
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Military sales, which are expected to increase, generally carry a lower average gross margin compared to commercial contracts.
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ISSC's net debt increased to $27.5 million at the end of fiscal 2024, reflecting incremental debt to fund recent Honeywell transactions.
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The backlog acquired from Honeywell is expected to take up to four years to earn out, indicating a longer revenue realization period.