Innovative Solutions and Support, Inc. (NASDAQ:ISSC) Q2 2023 Earnings Conference Call May 8, 2023 6:00 AM ET

Company Participants

Michael Linacre - CFO

Shahram Askarpour - CEO

Conference Call Participants

Tim Moore - EF Hutton

Operator

Greetings, and welcome to the Innovative Solutions and Support, Inc. Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Michael Linacre. Chief Financial Officer. Please go ahead.

Michael Linacre

Thank you, operator, and good afternoon, everyone. I would remind our listeners that certain matters discussed in the conference call today, including information about new products and operational and financial results for future periods are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, either better or worse from those discussed, including other risks and uncertainties reflected in our Company's 10-K, which is on file with the SEC and other public filings.

Now, I'll turn it over to our CEO, Shahram Askarpour.

Shahram Askarpour

Thank you, Mike, and good afternoon, everyone. I will begin today with remarks on our performance in the fiscal second quarter of 2023, followed by comments on our long-term growth plan and strategy. I will then turn the call over to Mike, who will take us through the financials.

Our second quarter results demonstrated continued momentum of our business and elevated demand for our innovative products. Compared to the prior year, our net sales were up 7.2% to $7.3 million. This improvement was driven by the higher volume of our aftermarket products, including our Autothrottle for the King Airs.

I would like to remind our investors and stakeholders not to over analyze our quarterly performance as it can be subject to variations in purchase order timings for our aftermarket products, which currently represent approximately 40% of our revenue.

While we are pleased with our strong performance this quarter, it is crucial to take a more comprehensive and long-term view of our financial performance and growth. As we have reported on in the past, our business is well-positioned to benefit from significant operating leverage on higher sales, which was demonstrated again in the second quarter.

As such, our gross margin expanded to 64% from 61% in the prior year primarily due to leverage on higher volume and a favorable product mix. Operating profit in the current quarter was $1.4 million, which was $380,000 lower than the previous year.