ISSC · Innovative Solutions and Support, Inc.

Innovative Aerosystems delivered fiscal second quarter 2026 results with net sales of $22.4 million, reflecting 2% year-over-year growth despite a $7 million decline in F-16 revenues due to a prior-year manufacturing transition at the Exton facility. This was more than offset by $18.9 million from non-F-16 business, up 69% year-over-year, driven by strength in commercial aftermarket and business aviation markets. Gross profit rose 1.5% to $11.4 million, yielding a 51.1% margin—slightly below last year's 51.4% but well above the mid-40% target—benefiting from a favorable sales mix. Operating expenses increased to $6.5 million from $4.3 million, reflecting R&D investments and one-time acquisition costs. Net income of $3.4 million or $0.19 per diluted share compared to $5.3 million or $0.30 last year, with Adjusted Net Income at $4.8 million or $0.26 per share. CEO Shahram Askarpour highlighted positive momentum, strong bookings, and margin realization, noting three acquisitions: February's Moog autopilot product line, and April's two Honeywell asset purchases and licensing deals. These are projected to add $10 million in annual revenue at ~50% gross margins, advancing toward a $250 million revenue target. F-16 manufacturing has completed certifications, with normalization expected in Q3. Backlog grew to $87.0 million, supporting visibility. Balance sheet shows net debt of $48.3 million (1.7x trailing Adjusted EBITDA), up from 1.4x year-ago after $33 million in strategic investments, yet $49.8 million liquidity provides flexibility. First-half free cash flow of $7.7 million and trailing twelve-month $13.2 million underscore operating leverage and capital-light model, positioning for continued growth across defense and commercial markets.