Innovative Solutions and Support(ISSC) - 2025 Q1 - Quarterly Results

Revenue Performance - First quarter revenue was $16.0 million, an increase of 71.6$8.0 million during the first quarter, up from $2.0 million in the prior-year period, representing over 40$15,968,729, a significant increase of 71.5% compared to $9,308,063 in Q4 2023 [28]. Profitability Metrics - Gross profit was$6.6 million, with a gross margin of 41.4%, down from 59.3% in the first quarter of 2024 due to lower margins from the Honeywell product line and increased expenses [6][9]. - Gross profit for the quarter was $6,610,457, up from$5,523,162 in the same period last year, reflecting a gross margin improvement [28]. - Adjusted EBITDA was $3.1 million, up 24$2.5 million in the prior-year period, with a net income of $0.7 million or$0.04 per diluted share [6][11][12]. - Adjusted EBITDA for Q4 2024 was $3,078,676, representing a 23.5$2,491,098 in Q4 2023, with an adjusted EBITDA margin of 19.3% [29]. - Net income for Q4 2024 was $736,192, down from$1,057,350 in Q4 2023, resulting in a diluted net income per share of $0.04 [28]. Operating Expenses and Efficiency - Operating expenses were$5.3 million, representing 33.0% of revenue, down from 42.0% in the prior-year period, reflecting improved operating leverage [10]. - Research and development expenses rose to $1,107,736, up from$901,144 in Q4 2023, highlighting a focus on innovation [28]. - Capital expenditures for the quarter were $261,364, compared to$182,918 in Q4 2023, reflecting ongoing investment in growth initiatives [30]. Cash Flow and Debt Management - Cash flow provided by operations was $1.8 million during the first quarter, compared to$4.2 million in the same period last year, with free cash flow of $1.6 million [14]. - Free cash flow for the quarter was$1,580,094, a decrease from $4,032,817 in Q4 2023, indicating a shift in cash generation [30]. - As of December 31, 2024, total debt was$26.5 million, with cash and cash equivalents of $0.6 million, resulting in net debt of$25.9 million [13]. - Net debt increased to $25,907,930 in Q4 2024, up from$10,144,180 in Q4 2023, with a leverage ratio of 1.8x compared to 0.9x last year [31]. Future Outlook and Capacity Expansion - New orders in the first quarter of fiscal 2025 were $7.5 million, with a backlog of$81 million as of December 31, 2024 [12]. - The company plans to expand production capacity at its Exton facility by more than three-fold by mid-calendar year 2025 to support increased demand [5]. - The company anticipates overall gross margins to improve by mid-2025 as it completes the integration of F-16 products into its facility [5]. Asset and Liability Management - Total assets decreased to $81,253,935 as of December 31, 2024, from$82,382,261 at the end of Q3 2024 [26]. - Total liabilities decreased to $33,482,427 from$35,743,606 in the previous quarter, indicating improved financial stability [26].