Innovative Solutions and Support (ISSC) 11 Feb 222022 Q1 Earnings call transcript

00:04 Good morning, and welcome to the Innovative Solutions & Support First Quarter 2022 Earnings Conference Call. All participants will be in 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. 00:33 I would now like to turn the call over to Shahram Askarpour. ahead. go Please

fiscal This Innovative morning. call Askarpour, Executive year. quarter Chief discuss outlook conditions XX:XX the for & is Support. of coming of first the Solutions performance conference current Welcome Officer business our and Good for Shahram XXXX, to to our

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the directly such in travel. today, remind Shahram Magazine to organizations entire recently, in materially, forward-looking IS&S our advancing results transformational Shahram to state-of-the-art remain and of loss good controls. is future flight those I or autothrottle new with which contributions call have listeners benefitted statement the turboprops. for could including Several SEC included that and our innovations IS&S on avionics and innovations immediate our publications the certain Directors. Geoff's you, full-regime as and either morning, dedicated and for a file colleague, and and proven actual flight Geoff's from Board deck dear Thank risks display with mourns operational Flying most reflected would XX:XX air truly to will statements industry. other Geoff deepest Hedrick, systems altimetry, I and XX:XX Geoff's Leading AOPA of worse and from discussed Before the that such have company's Board better matters XX:XX to the conference significant as extended public Geoff systems and results recognized subject family. sympathies and professional filings. friend of career the and his our of XX-K, other safety the His extensive including differ a products everyone. uncertainties cause discussed, read that financial and begins, are are periods uncertainties risks and The

Dr. faith, XXXX. our Shahram Vice with to and Askarpour in and tenacity to XX:XX the with started and support. Executive President miss and Officer to unique his humor. elected Engineering full Chief promoted confidence promoted President has as of was Directors in XXXX will We vision, IS&S Shahram been of Board

held worked engaged technology processing to IS&S' the signal For Aerospace with contributing fueling Geoff, his XX:XX IS&S' ThrustSense decades, patents. Smiths in numerous positions with managerial Most is inventor closely managing behind key adding fully Marconi aviation to business and the a for Shahram Shahram numerous almost success. while recently, he two Autothrottle, named technical new innovations Prior to existing and IS&S, Avionics.

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of developed of us This fortunate straight want return unique years to that their for create business I continue Directors I strategy on and shareholders nearly have to capitalize years revenue to dividends Engineering worked to confidence the For $XX million that with very products has value in our to and growth, driven thank cash plans and competitive President is enabled flow. just profitability have our as Geoff on past on the collective was Board planning. the the My couple decades, focused in three closely nearly the two positive Head in of as XX:XX XX we to goal and our last shareholders. for advantages, years. in me. of vision Together, grow carry to

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we success offering portfolio of believe are also transport the value continue some to to both aviation, what We're is performance a products for price the military Our general OEM commercial that air on markets. diverse based well retrofit best and offer the in XX:XX of growing markets. products and

a production revenues of This predictable recurring offer OEM quarter. this solid as a foundation is again demonstrated strong base for Our was contracts once growth.

new existing and our both innovate to continue the of products products. will We development

and time. display demand, portfolio features, serving existing functionality our product reduce air products installation front, to we market. add installation autothrottle transport On to developed line strong have to continues are new we experience autothrottle process the a developing to that new As the XX:XX

Our the that technicians modification. marketing team during of advantage downtime are the test training aircraft the international month process sales this our run reduces of force take and new to

market, and the and are development. in of level department. market aircraft. capitalize a we in retrofit past we to by plan our at To investment at research as technology our sizable XX:XX continue a turbo broadening sales potential the such We consistent CJ as part new quarter, years. to will overall autothrottle percentage for the product revenues NBAA fans our R&D maintain invest growing with last our we are developing announced Another several on marketing of As strategy,

We with growing program our our help a the and from constrained XX:XX have pandemic in the Sikorsky new efforts attending and the period, manager military of marketing to new hired military we with business. trade meeting portion efforts development After to long U.S. professionals. ramping sales a Force background where level business and, due our activity, restrictions, face-to-face of more marketing adding shows, are up were customers therefore, Air with

In for deliver customer new remains quality aftermarket of of a identifying efficiency on also is resulted supportive personnel advantage a efforts see strategy continue products business. in our quarter, competitive challenges. several ability chain operations inflation provide inventory XX:XX continuous to to Our extended base. as and a net of market flow improvement supply chain, timely and period current to supply potential deliver opportunities. OEM success revenue of our base our expenses side all first in business. areas will during success price protect optimize judiciously this Operational enjoy to us in adopting key military the exceeded challenging income. reduction opportunities in of a areas products customers times, strategy ability the This our of and some from percentage used of enabled our and We these by with developing the we see our many While focus an to the processes our challenges pandemic, of increase years our to some us other we despite enthusiastic to has to XX:XX the we ago, where performance first industry-leading operating cash our XX% in cash in quarter. this strained Since

to markets financial are to results. generate pandemic it restrictions positioned in turn and to to XX:XX end confident we more our lifted, are As continue some to build imposed improve Now are I'd steady of financials our Rell over begin success and review this that well to on like we detail.

all you thank joining and for morning. Shahram you, Thank us this XX:XX

revenues quarter, million, up XX% $X.X year ago. first the from at million a $X.X Looking were

Our and growth. air transport general each contributed business aviation the to commercial quarter's

PC-XX last no schedules Pilatus to predictable and to and production sales well as follow fluctuation revenues operating OEM with to year-ago for Autothrottle line well million, provide the as XX:XX up to quarter of as in Our tend mix to quarter-to-quarter trend King XX:XX and a continue programs reported $X.X Air backlog we in the with, which improved Our Textron compared was customer exception. production exited quarter steady instance, revenue this long-term from up production in to margins up run as primarily XX.X%, XX.X% leverage panel Gross new both King the of growth Total quarter. remained were ago. our Margin $X.X attributable in from revenues million $X.X product million is orders and continues quarter In high revenues. strong. rate. the with year were quarter orders while XXX/XXXs Cargo the the sequentially with production and resulting Air point Air averages approximately flat XXX/XXXs, historical a quarter XX.X% in continues line, to at a for same

For our well public our as XX% year year leverage operating from year We to up we ago administrative million, XX:XX year expense believe $X.X for technologies XX% revenues and in-person on marketing and trade for as ago expenses the target helped remain fiscal in expenses and resuming Due the and XX% the and new our will as we manufacturing both XXXX customer ago. Research strengthening development an absolute a Selling, of some of growth fixed general to business. our quarter quarterly continue growth which quarter spend first organization innovative Total revenue of strategically instance, as XX% the as range. from and were to quarter. in current shows expand to been unchanged the margins. overhead is a of increased and marketing restrictions, XX% ago basis but revenue development on at operating have sales XX:XX over well a health were down year past relatively compared to level from products. relaxation in XX%

going We cash taxes up million million a of The in income generated $X.XX quarter per For from ago. tax rate company significantly approximately forward. will per remains quarter. XX% We position. flow XX:XX now the which quarter in or ago the revenue, in $XXX,XXX Net operating increase operating or as the first $XXX,XXX we be $X.X our the we that have year $X.XX of quarter year recorded $X.X is a XXXX. of share fiscal fully financial tax was just the anticipate of for We $X.X generated XX% in strong million, income an from NOLs. our of $XXX,XXX share, utilized quarter,

As end, issues an So call challenges pandemic, the the had XX:XX for as the company resulting fund $X.X quarter of company cash and that COVID-XX measure ongoing on due inventory hand. on back continue that of I'd like from We discussed has fiscal believe December, we at COVID-XX cash XX:XX of sufficient December precaution. debt-free. million the the added chain foreseeable that The -- future. some call to slightly the to turn company to anticipates will year-end Shahram in XX, for to the earnings remarks. maintain we a closing supply from higher-than-normal level is Now to operations

The Rell. that to you, strong Thank and plan we XXXX XX:XX trend. has fiscal continue year started

have value excellence. service We and through to built customer products creating dedicated technology strong operational a team innovation and

the dedicated plans. floor the as is our questions. to strengthening team continue We an open growth now energetic fully and business. products technology will great for this We arsenal We put on and grow the an we enthusiastic will with executing of XX:XX organization that

Our David Instructions] Company. this [Operator time, from will & with the comes Davis question XX:XX floor we At first questions. Campbell open Thompson for

You many ahead. go now

information Shahram. time report, great issues delivery problems did travel a any the It's in year. want start you getting know issues you a supply that to with had the I for situation? Hi, with to Hi, chain fiscal there your and if production is XX:XX great parts Rell. to any

taken we've we occur far, us some parts. may measures, we on, in also have see additional been of hired we find We've procure in challenges areas time. some So present fortunate that procurement been ahead people including have XX:XX the where earlier We've parts to lot stake. of help not where to steps a taken

-- deliver customers to any where had to it not to have able we our we has have So chain. not not been situations supply due

from the XX:XX percentage the quarters. substantially That’s up as good. down but SG&A And prior of is Rell two a sales, it's

Yes. XX:XX

of fees So when usually incur we audit, because QX, things it's financial of up. nature typically, audit that the and

look over history, higher. usually first is you quarter If our

some have QX. trade in also the We shows

bumps up it that a bit. little So

Yeah. XX:XX

mentioned, -- your expanding So staffs you are you impact but had that have as research some -- your on cost that and line marketing must too.

saying, apples-to-apples, history want you it If we'll XX:XX from bump probably up what past so. I'm

XX:XX Yeah.

future for is quarter not million $X.X quarters? be the to So necessarily for the going $X.X million

My that, trade than guess a little it XX:XX is will be more bit maybe less shows. but

trade shows audits. XX:XX and had We

bit little down it be will So going forward. a

XX:XX Air nicely. Autothrottle backlog primarily the reflects orders that equipment? The primarily Right. backlog is? Is the up The is growth where King

segments, on interest including were orders all In actually, the from seeing of getting we're maybe. military U.S. some XX:XX the increased all segments business,

a overall, So is which up, moving good everything tend sign. is to be

Yeah. revenues growth. XX:XX future in -- Well, should future it be reflected revenue

So that's good.

the marketing think him Geoff of indicative correct? people the the -- Is is company. but assume that. as the thought of was chief you've I backlog replace I always lot will help some added I assume which a lots salesman that you've added things, sales personnel, of chief, And I of that

of I've been our do base Yes. XX:XX also that to with all keeping them. that. customer to And continue We close continue and always very relationship

relationships. [indiscernible] had Geoff good. Very Right. close XX:XX

that was good quarter. Okay. go. and Thanks a I’ll let help the for you

XX:XX Thank you.

comes XX:XX Retail next [Operator question Michael (ph). Our Friedrich, from Instructions]

You ahead. may go now

XX:XX Good morning, guys.

morning. XX:XX Good

retrofit XX:XX a out far to be how and the the little color here? be do an enjoyed shorter a of may is, easier will it more for always my bit like to do and expect his Anyway, him, folks Certainly, installation this? less to to for on time it Shahram, much the we as it us the you make even how guy. that Can consuming, going he's also, -- it then get market little to speaking seems give costly. the question, on you Geoff like try Textron able and process discussed condolences And be process innovation much to I the less as family. so with incredible my certainly was,

able takes in of the terms component of things And such time, in So it XX:XX angle we like reduction terms benefit of see the it time the in within installation aircraft. for installation where more downtime if installation aircraft. of keep that would of about the two it keep they And can weeks that angle we that to an the attractive. to be believes do time -- Textron will more be of confined the period to

the to done airplanes their a So that. speed come those on believe up takes for than achieved for we've while new roll example, with instruments. we of It don't installation have longer for hang on there time calibration of takes of the that were some just heading the process. on calibrating to the technicians minor day to process. we We've automated a equipment, going We've like and improvement, the And steps pitch, to process. in that. It XX:XX of out where things standby that about

improvement. and better how there's we where time So and call done can't reduction a how in until exactly perform the it, areas exactly we'll a be lot technicians see Textron time then say the much saved. have become we've we tasks of much in proficient into I will

this? feedback been mean, I Has from excited they the Understood. XX:XX good Textron? about are

of do was in-house thing that their now a we takes So XX:XX one an they them they and of to because angle carrying I inventory excited and mean shop or actually to one buy some are it. they're another convince we to lot autothrottle. with issues their that the them was also very somebody about did have with comes And in an going order airplanes, time. time the it also whatever,

installers have that So going our them we sales we're are I all going XX we And think But all the as continue provide technicians talk salespeople, in train inventory this are that And Textron our technicians to guys of They affiliate. doing these about immediately. other installation. end so down new it's carrying as to international the going on we with classes, Textron. as non-Textron training international can down well that will to of month, started this to their conference. to month, then of but supply the are annual to our

it. Got XX:XX

the in production with? other nothing Okay. is discuss, obviously there I putting but discussion been of that some talk, least to And -- other are into putting some you other sure discussion right of there's there potentially of know have idea you're the OEMs in currently Textron progress, of at I'm the autothrottle now some lines. that --

currently product of with OEMs are We as lines. as discussions XX:XX for well some other our autothrottle in other

more giving the military right? there -- planes? without I of been And some XX:XX the away large much understand, just progress has much, on on too

idea primary and really communicate on an I'm to -- XX:XX putting that's for the -- long-term our That's KC-XXX, And autothrottle military. the actually of a flight all the the when with a have some And there's deal long large those term happen view installations it to -- -- our that. aircrafts, military. fleet provide doesn't of alternatory overnight example, that we of starting a for

XX:XX I going talk of forward And understand. Well, you luck and soon. best guys. to lot, thanks a obviously,

Thank XX:XX you.

your for support. Thanks XX:XX

as conference. This concludes XX:XX well as our Q&A session the

now good You disconnect. may Have a day.