Key Points – Revenue rose 2% to $22.4 million in fiscal Q2 despite a sharp F-16 comparison headwind, as strength in commercial aerospace and business aviation offset the decline.
Net income and adjusted EBITDA were both lower year over year due to higher operating expenses and the tougher F-16 comp. – The company completed three acquisitions that expand its autopilot and avionics capabilities, including the S-TEC autopilot line from Moog and several Honeywell product lines
Management said the deals should add about $10 million in annual revenue and position ISSC as a major autopilot supplier across multiple aircraft categories. – F-16 production has returned to normal run rates after recertifications were completed, and management expects quarterly F-16 revenue of roughly $3 million to $5 million going forward. Backlog stood at about $87 million, free cash flow improved sharply, and the company issued third-quarter revenue guidance of $24 million to $26 million. Innovative Solutions and Support (NASDAQ:ISSC) reported modest revenue growth for its fiscal second quarter as strength in commercial aerospace and business aviation offset a sharp year-over-year decline tied to the F-16 program.
Chief Executive Shahram Askarpour said the company’s “positive business momentum carried into the second quarter,” citing significant organic growth in commercial aerospace and business aviation, continued strength in bookings, strong margins and free cash flow conversion. The company said commercial and business aviation markets grew approximately 50% organically during the quarter. The results came against what management described as a difficult comparison with the prior-year quarter, when F-16 revenues were elevated because deliveries to Lockheed Martin were accelerated ahead of a manufacturing transition to the company’s Exton facility.