Innovative Solutions & Support, Inc. (NASDAQ:ISSC) Q2 2022 Earnings Conference Call May 12, 2022 10:00 AM ET

Company Participants

Shahram Askarpour – Chief Executive Officer

Rell Winand – Chief Financial Officer

Conference Call Participants

David Campbell – Thompson Davis & Co.

Michael Friedrich – Private Investor

Roger Goldman – Private Investor

Operator

Good day, and welcome to the Innovative Solutions & Support Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Shahram Askarpour. Please go ahead.

Shahram Askarpour

Good morning. This is Shahram Askarpour, Chief Executive Officer of Innovative Solutions & Support. Welcome to our conference call to discuss our performance for the second quarter of fiscal 2022, current business conditions and outlook for coming years. Joining me is Rell Winand, our CFO.

Before we begin, I’d like Rell to read the safe harbor statement.

Rell Winand

Thank you, Shahram, and good morning, everyone. I would remind our listeners that certain matters discussed in the conference call today, including 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 the call back to Shahram.

Shahram Askarpour

Thank you, Rell. In the second quarter, we continued our steady growth with revenues up 34%, earnings up 135% and nearly $2 million of cash added to our financial position. Together with our strong first quarter, this is one of the best first six months in six years. At the foundation of our aftermarket business, we believe we have excellent products in attractive growing markets, including our award-winning autothrottle on flat panel displays for air cargo convergence. As our OEM product base continues to grow, our aftermarket equipment is being installed on some of the world’s most popular aircraft by the most highly respected owners, operators and aircraft manufacturers, both domestically and internationally. We have been known through the industry for our compelling price for performance product for over 30 years, and we plan to remain so for many more. This is our formula for success.

Now let me discuss our recent results and future. Revenues in the second quarter were up 34%, which led to gross margins of over 61%, our highest margins in six years. Our model can consistently generate attractive margins as we achieve scale. This quarter, we continue to generate revenues from both our stable OEM production contracts, which offer a solid base of predictable recurring revenue and from the air cargo retrofit market, where we are experiencing strong demand for our cockpit upgrades. Because our production OEM contracts extend that over several years and there does not seem to be any decrease in pace of air cargo convergence, we believe we have a solid foundation for growth.