Innovative Solutions and Support (ISSC) 14 Dec 222022 Q4 Earnings call transcript

Greetings and welcome to the Innovative Solutions and Support, Inc. Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Michael Linacre, Chief Financial Officer. Michael. you, Thank

begin. You may

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

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Thank strategy. performance year you, good in I prior marked the XX.X% call to will XXXX. defense I Fiscal and Mike on the XXXX aviation, with everyone. our followed today XXXX the support year will end comments then and attributed will by in turn begin commercial million end-markets. Mike through market and to take a Higher us compared fiscal the over XX.X on up aviation, details. financial growth fiscal general with year who underlying] [for long-term remarks to strong performance, upcoming [ph] afternoon our revenues compared was revenue of

our [Indiscernible] the KC-XXA. we higher several year, Autothrottle, PC-XX, sales products. Pilatus delivered [conversion] driven During portfolio the [ph] our the commercial programs, were [indiscernible] broad-based which on air included program, programs, cockpit Air across success transport Textron and by King

in XXX, This XXX aviation. excellent than is combined more we XXX, in As supported the in markets. in growing a our rapidly platforms cockpit starts have stated effort and upgrades presence with XXX products formula general past, attractive growing winning with by

revenue increase compared gross profit. XXXX, growth gross leverage during XX.X as over gained overall period our We operating We on to XX%, our of to we sales. significantly in profit outpaced higher XXXX. to the Turning increased million fiscal an

XX.X%. gross a increased As points, percentage XXX margin basis of sales,

a as XX.X% XXXX, a expenses leverage in in operating For the percent achieved compared of to with decrease full-year, XXXX. XX.X% sales

legal there the the and year, the to by which costs sale fees, related PC-XX on professional During of a aircraft. were were offset some one-time gain

team continue the all drive our benefit additional also aftermarket anticipate be to these We in success our our further our With the we up as leverage operating size we King FAA results all from products has to higher with regards opened [indiscernible]. expense the grateful results King XXX Autothrottle of to for our GXXXX the yesterday, in market certification they the activities we forward, gain excellence to reflect and completed in for Air believe dedication Going of our cockpit as have we we innovative [diligence] stakeholders. for received able our [ph] to market for the Air. the customers. opportunities, STC I'm delivering will and sales,

Next, I'd we like front long-term some in to short expand of that opportunities believe further of us. and our are

gross in and increase volume volume underscored improvement on As our of utilization, platforms than add This XX% we further and leverage we inorganically. growth both our existing product organically year-over-year. operating incremental begin revenue fill of more basis margin XXX incremental into incremental asset intend To by expand our to portfolio sales. point

increase of products organic a portfolio annual have platforms the decision invest our and of made strategic in On we to serve. spend side, expansion R&D and we

XX% we around automation area spend remains to as to anticipate approximate sales XX% XXXX, XXXX. total us. fiscal of result our for a in Cockpit year fiscal compared a focus As R&D

King and of Autothrottle development our platforms. the plan Autothrottle the Eclipse. of for with demonstrated Air, continue strategic As to We PC-XX, growth

internal customers. able reducing and our we from complement be expanding cash acquisitions that product Expect fund flight our other [Indiscernible] can team value and enhancing additional we in an exceeded fiscal $X portfolio automation. portfolio. inorganic Beyond existing through to cost bolt-on utilizing cockpit opportunities automation, through Autothrottle, existing bring development operations end for areas safety [ph] assembled we which are planning in to to have We acquisitions it free invest sheet By sue] to of flow and type XXXX. million [to line cash product business on balance operating

liquidity and Additionally, this to balance deploy options we to are strength currently sheet have for to noted utilize add initiative. the evaluating of our to total available

performance the fiscal leverage to together, overall increase the we we our support opportunity believe believe meaningful our line our our in free a top full growth capture and capacity, incremental conclude, margin we sales, can grow operating asset our results believe and infrastructure business. and business. cash we in Taken can generation. utilization, drive XXXX At increase that demonstrated operating To total our to strong

laser look focused for growing portfolio are utilization margin drive quarters. increase the you you time on to interest. We forward and to our and and Thank in with further incremental We details coming business your profit. updating

at call look numbers. the to for Mike turn the a will I Now, over closer

was the Defense. commercial work panel service flat military Department million Shahram, fourth all recap to customer and related the for saw X.X also service. commercial fourth million on in you, to X.X compared the fourth fiscal us in the air due due improvement continued Customer quarter I'll revenue you X.X the as C-XXX Thank programs in-part XXXX on The Increase military joining rose our Growth in transport to sales results. briefly driven side, a revenue product our commercial ago. financial in quarter company quarter revenue by to in customers. and strong quarter, for during review to results for to was retrofit businesses fiscal financial program. in of and year X.X% well repair sales fourth our as mainly increases thank today. of million, our XXXX the displays from increased to Revenues

our to expect service portfolio generate products of We going growing forward. to IS&S revenues customer continue installed

cost the We Textron Air XX.X only the orders in production We remain that our a orders included one on is along locking total a production in passing their KC-XXA that the these sales advanced already our PC-XX, contract normal in was incurred in order. chain X.X about result backlog. aviation million programs a to programs platform supply in-hand quarter product to and fourth our purchase XX, include long-term for expanded OEM million. to includes of New pressures. significantly beyond include Operating mix. the for we higher fixed a leverage and of portion that Fourth contracts anticipate margin year. all September inflationary as improved in from and provide clauses] of generating Not in OEMs our King backlog. as production their large should by cost decade almost from Current favorable as quarter with basis gross compared of [ph] XX.X%, a XXXX the backlog approximately add were long-term revenue of backlog will general Pilatus continue points last to increases of XXX benefited [escalation

which PC-XX employee revenue related in result profile Our including increase year of fourth headcount were to saw of to STC X.X to Total fewer X.X as and an expense continue on lower and model, relatively support X% a were aircraft. in we well-positioned expenses quarter. a those by earnings million operating and offset gain fees, compared our prior optimized as over certification. professional headcount to legal R&D our revenue time. attractive fourth lower the around We the R&D is the projects, margin grow and quarter, maintain operating in were

quarter. target We quarter X.X prior to million fiscal expect or in share, net the R&D expense fourth X.X for in per XXXX. of fourth per million compared Fourth XX% or to X.X around year fiscal quarter in revenue in Tax was of was million income $X.XX share X.X the million the XXXX. quarter versus $X.XX

or to in of per our decade. consecutive year fiscal compared revenues recap per Fiscal than in up was XX.X year that most that profitability our of time XXXX of point more for XXXX. XXXX share, million X.X fiscal $X.XX fiscal share, or year-over-year million. was XXXX Not XXXX Moving Net a exceeded XX.X% fourth a with revenue fiscal to another brief reached in $X.XX in income to which at million, results. our growth fiscal record profitable XXXX, X.X

IS&S we of such from $X.X X.X expense XXXX. tax As third with There a a income per allowances with the would financial in XXXX. compared continues liquidity. the have financial per during X.X $X.XX GAAP million, was to full-year diluted million been share. highlighted position Net XXXX which diluted a aided fiscal net compared rate. to in $X.XX year per to tax release X.X valuation $X.XX with per income of X.X fiscal of corresponding tax net benefit benefit was million X.X no differential drove fiscal tax income diluted XXXX or normalized million share of was a or share, share, results, $X.XX our deferred coupled a ago On the to million quarter diluted X.X maintain million or by basis, income solid from or a significant XXXX, net

of is on In flow activities addition, cash airplane. hand PC-XX flexibility. the supported the year-end sale million XXXX. had from million us the strong in with year generated We cash from provides for the at was operating which activities free, cash XX. fourth of We debt financial $X.X Net company by of fiscal $XX.X fiscal September quarter investing

engineering investment that, the anticipate cash forward that flow reflect will With opportunities. fiscal Looking for our operating R&D ready operator, taxes, are and as inorganic XXXX, in we capitalizing development as we contract development, well programs, on continued cash both and engineering hand to on of payment potential questions.