Innovative Solutions and Support (ISSC) 10 Dec 202020 Q4 Earnings call transcript

Welcome to the Innovative Solutions and Support Fourth Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Chief and Chairman Hedrick, Executive Officer. Geoffrey ahead go sir. Please

and Welcome Good for call conference is business the year. the Hedrick. morning. Geoff to conditions current to XXXX, quarter fiscal our outlook of for coming This fourth year our discuss our performance

Joining President; Relland CFO. Askarpour, Winand, our Shahram me our are and

Rell Before like the Harbor to I begin, I message. Safe read would

and results results call from either risks Thank for and to operational uncertainties risks our differ matters that discussed Including certain on our discussed. which listeners you, Geoff, actual that forward-looking and could and worse our and SEC periods, to products good file the future or morning XX-K, public today, conference statements reflected the in cause everyone. company's other better and filings. subject new financial other uncertainties materially, I would remind are those including in is with that

Now, Geoff. to I'll the call turn back

I had and market products our growth. Several performance change in announced Fourth during our years would you, operating technologically are finish, this I'm that focusing a Thank by price resulting pleased driven performance that quarter period our to ago, change Rell. strong quarter-over-quarter validate advantages. we direction. appears and the a on challenging year-over-year, to approach only sequential

per year dividend. partners protecting results the a in revenue strengthening achieve revenues to performance, our while contracts, Board We that continued production September, Our of pandemic. and against were consecutive year our in foundations XXXX and strong while increased our cash recurring profitability, revenue share continued able of cash $X.XX quarter the on confidence this declared our underlying employees, success. of special Directors ago. our flow, The was customers growth and Based support success, a year of growth second and on these hand XX% full from Fiscal was XX%. the solid OEM increasing

new the for move supporter the strong through two their of among mentioned into autothrottle equipment of to the in XXX first on They a their is are a -- King turboprop list the routine production November, first that precautions aircraft. to IS&S growing the workload presence, major Air minimal, XXX are standard support equipment and Textron duration other King supply of platforms. first impact our contracts offer promotional opportunities upgrades protection of reducing major recently, recurring features operators expected looking our and value. XXXX. production. a joining Boeing's that now to base XXX PC-XX We're products autothrottle Textron routine standard a aircraft, life as for Air Textron begin autothrottle part of NEO Air announced to on with Air pleased turboprop. healthy a with environment. While King certification our joins OEM XXX guard have The has delivery delivery twin into the tanker on King and last other for us production been celebrated Textron OEM have We business These feature to-date technology. They're IS&S Max safe to now an grateful as the is of and material. contract been work perspectively supporting last production KC-XX our long-term In commitment Beechcraft and their More safety be the the revenue awarded significant Textron become the and years. its as ThrustSense announced Textron on had ensure its scheduled ThrustSense contracts XXX OEMs half in Pilatus working quarter

meet Textron the has beyond and owners. retrofit expanding the air market to currently Air's general service base ThrustSense in and are containers positively production also well. as demand for and has service aviation of we potentially service. see to multiengine opportunities of the center with autothrottle help aircraft a King grateful levels, and Consequently, of are promote military organization this centers XXXXs working significant pursued ensure aircraft for transports the We to technology look lifesaving availability our at the

In addition, TrustSense that surrounding finding we with interest the hasn't our other publicity OEMs. are created

stationed of We contracts are that that are optimistic a is FAA inoperative performance, only with our improves air services and provide organization, not certified wide new unparalleled Wichita. offset the sales compelling safety. business Precipitated opportunities with carrier lifesaving supporting support Textron support business We're but now He Textron have representative very in can protection a working worldwide potentially hired explore support retrofits. differentiator in. in to at a autothrottle region. service present now our by operators engine Textron will interested we the one We're senior business, multiengine adoption technology and

and and demand a support growing Our LifeGuard and our to personnel Autothrottle military for encouraging addressing markets ThrustSense, autothrottle programs business very large opportunities excessively director continue results, is for and protection air systems. with sales recruit transport

ability Upgrade and of completed, demand to shopping to quarter. In the upgrades be which converted our development Navy, online for being Vision of work Eclipse latest to we in developed the autothrottle, FX the an pleased in fuel our we flat has the U.S. announced Engineering we XXX upgrade and This Eclipse our increase technology. September data we for display with installation computers number Synthetic Air addition, cargo. airplanes for and fourth panel aircraft first generated continues of shipped the XXX able Jet. growth the ongoing had are increasing in Autothrottle features. aircraft The and for our owners certified The to to XXXX, offer FAA was the the the

for FX. the We are international now marketing customers

financial turn results. for me to some Rell this over Let

Geoff, and morning. you, this Thank us joining you all thank for

Growth activity. development Gross to our the quarter, were year. new XX% up R&D, to customer-funded were in the growth is we the XX.X% quarter, the we for product reflecting fiscal million, support This strong in to which expenses year and was operating quarter, on support over $X Total a service quarterly FX administrative resources about achieved attributable million quarter. Looking the the of $X.X was income. FX primarily a margins contract, was production this again, innovative XX% generated general first development funded final up engineering business the higher Nevertheless, were commitment fourth yielded Also, This increase in from air the the shipped revenue completed computer due that at year with decrease quarter. the year revenue to R&D from the ago XX% quarter from from quarter quarter, in increase the entirely X% margins internally in warranty and million more as in rate approximately we and development a engineering year Navy the of expense product up mix, addition averages $X.X development fourth product million, shift our expenses in historical limited Research expense to had revenues, ago increased in the down quarter, development. the for year over quarter modest ago need costs. years. to not rate. resources was fiscal ago Data with Selling, and quarter, revenues up customer year ago this almost $X.X to growth and unlike U.S. and XXXX order XX% operating consistent the of ago quarterly fastest and line this entire remain XX.X%, material add the margins. strong needed contract of revenue, the completed. is Company's with which reflects were in

generated we of year quarter $X.X net approximately down rates of share. million operating quarter, income revenue. Other interest We reported decreased. million or income or ago $X.XX income XX% of the For from $X.X was quarterly the per as

Company results the and restricted The amount of the In September XX, Board cash We the XXXX. cash. X, our paid of debt-free. balance share foreseeable the $XX.X dividend million or corresponding year, $X.X reported per that on at XXXX. from full at XXXX offset fund cash Company cash position. on strong has net the from fiscal $X.X respectively, Looking in The cash operations XXXX September, for Company had net year million were of future. approximately is share, for in The on which was from remains of accrual and a to XX, sheet, XXXX. of $X.XX generated fourth $XX.X the dividend up hand sufficient income positive flow of XXXX. share $X.XX fiscal was total million revenues $X.X increase fiscal million of generated or million income million in $XX.X per XXXX over appears Company $XX.X which a for in XX%, quarter by per October for or operations $X.XX Directors $X.X declared financial believe We million, of XX% million, XX% The as an September

Shahram. Now, I'd like to turn the over to call

morning, and and growth quarter Thank the bottom strong generation. fourth good and of you, of everyone. on sales consecutive top best and cash our point a fiscal line put Rell, second fine XXXX quarter was The year our

that we More for OEM solid should feature XXX third new OEM revenue our our contracts join ThrustSense Boeing. foundation equipment importantly, autothrottle contracts King King will recurring These standard year Pilatus of was Tier contract with a with last Air a our and aircraft ongoing a are as to building and OEM that it years. Textron. X which booked are XXX in Air production manufacturer

partners of delivery is Let reiterate XXX King Air Geoff customs. of implementing production this that with executed Air the first aircraft to what ramping productive quickly growth XXXX. while well a first contract and policy scheduled and and successfully on kept our XXX as procedures strong is last all also me The and Air King safe the up month. safety customer half as the just generated protected We profitability for and delivered in earlier. King program mentioned have employees our new

time. to unit been increase and quarter have naturally anticipated expect Textron follow We in since shipping over the orders third production ThrustSense to

shipping Textron shipping have addition Air also In installations. to centers for for to the units they the we service for where King XXX, to retrofit used distribution are installation units been on

series. ProLine and much the being variations is point, ProLine forward currently about this Beechcraft At opportunity for addressable King Air equipped represents Air than estimate King which $XXX greater pursued Air Fusion total million market. with are of the XXX As we this the are Beechcraft certified imminence. we series service, with retrofit XXX about X,XXX the Geoff Other equipped King retrofit avionics in fit and XX mentioned, a some with

horizontally autothrottles many Wichita our to We office are are not to our to and across for organizations Both owners Textron an only with from take in well opening military. support autothrottle Textron. which thanks relationship aggressively promote well aircraft where Air, provides service. consequently retrofit, and our the only peers is marketing other King shipping the The also foundation expand product the the installation also solid going a as partners Air but market, the we as OEMs King but

of aircraft for OEMs have interest. levels. are twin ThrustSense that This support in we We IS&S. jet of both directly steady IS&S's twin all on ongoing Vision September partnership ongoing certified directly installation to which upgrades installation regards has Jet. manufacturers Eclipse a benefit of with review with briefly of our product production lifesaving now to turboprop, have and the is owners Eclipse reached with programs. Eclipse virtually nature our our Synthetic and multiengine PC-XX autothrottle. in the substantial aircraft essentially will XXXX, owners the FAA significant Potentially and announced upgrade feature state multiengine an program In conversations upgrade some involves has first functional now the from preorders. I marks autothrottle and

carriers, commercial the Boeing When planes, not unchanged. for predictable XXXX need was large for we also Pilatus cargo to Development This which number production are computer over is air U.S. successful. fiscal program program, units There services with delivered more including have flat operational in in fitting remains sales essentially retrofitted to to continue and Navy turning a displays. even to ship expect many proven work attention quarter. retro the U.S. this once direct We for support with FX data are continue larger to XXX fourth This also in This market was remains be successful. we fleet, would and in and our delivery market and are Dynamics is XXX now to convert we XXXs upgrades X,XXX product. to successful fly foreign a shipments the new transport stream. highly our current doing and versatile the be yet to installers, recurrent run our military much offering to we contracted are XXX of close panel revenue still a the years, believe, Their rate. Navy and XXX performance. of updated. to FX for completed, more highly large we production very their program, satisfied expected which that XX stable

OEM KC-XX steady Our with our of one It and recurring contribution profitability. to production program our make Boeing contracts. three continues KC-XXA to revenue is

that service mind indicative work-from-home a a from New were our or the the $X.X September marketing million peripheral our personally with as excited the and XXXX, some fourth impact revenue Balance as do over on intra-quota one our orders our directive. pandemic of any orders. FAA, activity backlog full of business is about Bookings is has products. and activities, and our at necessarily of backlog was which of the in we with ship of pandemic the end fiscal working ongoing for year meet limiting prospects, future in good in have under XX, are million. customers of sales customer business effect causing were will generate excess $XX operating of believe Keep XXXX on not quarter we to our X.X%. portfolio booking not the of ability significant complexity, quarter prospects The and and had has portion

Let the remarks. me call for Geoff some to turn back closing

balance momentum for audience take suggests years, fiscal market the of you We're portfolio for the a of opportunity. autothrottle Thanks, creating stakeholders. for with enthusiastic a our We solid receiving Shahram. a customers as a support are our sheet both two this today. reception. Growing ongoing strategy questions strong new value Thank that is real success year great and encouragement. entering growth, and strongly that your products you see required. for and I'll to Thank our

you. Thank

And begin the now will Instructions] question question-and-answer David from first the Company. Campbell will Thompson, We & session. with [Operator come Davis

a quarter. good for Thanks

end what that to -- ask I 'XX? wanted be what in you, rate the tax Just year of should fiscal accrued assume assume for Rell, do accruals? there you tax Will

expense, still Yes, we credits. tax some will be some have NOLs there'll be it and because R&D but some lessened

X% use a effective use thing. I I'm So, -- rate estimating would like tax type of

and retrofits? Shahram, and Airs of retrofits some them Geoff some or any the King And to Okay. were for of were shipments all -- any the -- or OEM

the the OEM, OEM very actually, in of a OEM, haven't growing -- line and both, airplanes But a yet. XX-odd event rapidly then lot retrofit. obviously, shipments, come off

But no retrofit revenues yet?

OEM

We retrofit actually have installation both done our -- Textron using on in a Australia autothrottle. on

service network the centers, they We've encouraging very is, thing local -- service promoting very throughout the huge retrofit. had they aggressively have centers the of are autothrottle And their a world.

day. room So, almost it better every looks very It's good.

revenues increase expect to those in you 'XX? fiscal So,

going Very to much that growth so, believe is we exponential. be the

downturn, this usual, Right, correct? right, the the is usual quarter, we'll the quarter, December seasonal have that

little Maybe, do a yes. better. We'll

questions. the and everything for thanks Well Okay.

good. And day overheads, becomes only It virtually. goes It's volume covers the precedent of a operation growth. We're trying It of better. profitable. stable to a which affects to as cash profitability. do it it generates up, was our straight not is excellent. trying more the all profitable, and more We're lot Look, because keep fixed every

another -- X, we're future. systems very to Listen, We're pleased already optimistic large X, for Textron's X, products see very retrofit delivering demand we're supporting So, it the carriers. our opportunity. about others X about package we're very and on new

is when really the the you -- I done have of effects of So struggling. pandemics, And We've other mean consider been companies business aerospace it's coming most up. well.

for Thanks job. great your a doing help. all you're Well,

what better. year, do a hoping looking we'll coming I'm to could I and If lot this do start

a we're It's very a great product. think We've customer. producible. got very good we have fortunate I

of customers outstanding. with All We're fortunate very that. are our

keep at just it. take ass day, and Every up [Murray] as we said, kick get working So, and names.

that Thanks got work answering to call appreciate Thank you're question. off lot for I've you. get a a your from I doing.

Thank you.

question [Operator Private of Roger next investor. Goldman Instructions] The is from [ph]

year It and Pollyanna history, that the it could are acknowledge like look you, my great like past trust sister and validates growth you the much and also that the And a And great of fabulous but quarter have the first quarter up potatoes. make a know. fact thanks in sounds to of year. small the you guys last late father's I future appreciative. for Company my for the being as want set last all, I in without

the dividend, solid congratulations So as the a fair on it the cash to thoughts the price? My operating impact even -- on after on amount that. goes acquisition the a that dividend cash. I question, debt think an no a books. small cash usually and use with stock of is of got have Any of would great with regular company either or We've profit

good question. a It's

that Some I can answer them. of some of

can. You

you you No, know know I can't. I can't.

But for any And cash we're of cash. it's interest have a at question, a operating reasonable we personally all. us in mean we I at generate that know cash a look paying income pennies. lot our accounts generate interest Look, in they're is, doesn't that I absolutely. not business to

Yes, yes.

that If it We have we're of automation in in the no some anymore. interest reasonably doing on floor and things. things, can the doing invest other we kind

We on itself a at And cash. we on generate good could that basis use believe make dividends the believe long-term stockholders that a we business regular actually our are cash will basis. because of looking

precipitated So, the we're $X.XX that. very conscious of what That's

Yes.

And continue taxation might what in in at yes, changes we look it, to be policy. of especially light

can guys the this are all positioning Exactly, And a for again, company yes. That's of you done, job for. doing ask I great well future.

We He's always good missed your a guy. was He funny. dad.

you meet some miss But after and We to him COVID guys just him and hoping there I'm on you. too. We thank time. out miss Well, come too. spend

look I forward it. to So,

know. I

Okay, thank you.

back remarks. any like our this to turn question-and-answer session. to the management gentlemen, concludes I closing over for conference would and Ladies

you. Thank

is disconnected. management inadvertently appears that our It line

everyone, The joining you, now thank has we today's completed, and been you care. Take may for So, call disconnect. presentation.