Download PDF

1. Company Snapshot

1.a. Company Description

Innovative Solutions and Support, Inc., a systems integrator, designs, develops, manufactures, sells, and services flight guidance, autothrottle, and cockpit display systems in the United States and internationally.It offers flat panel display systems that replicate the display of analog or digital displays on one screen and replace existing displays in legacy aircraft, as well as used for security monitoring on-board aircraft and as tactical workstations on military aircraft; and flight management systems that complement the flat panel display system upgrade for commercial air transport aircraft.The company also provides integrated standby units, which incorporate the measurement and display of attitude, altitude, airspeed, and navigation data into a single standby/backup navigation instrument for military, commercial air transport, and corporate/general aviation applications.


In addition, it offers digital air data computers that calculate various air data parameters, such as altitude, airspeed, vertical speed, angle of attack, and other information; integrated air data computers and display units, which calculate and convey air data information; altitude displays that convey aircraft altitude measurements; airspeed displays that convey various airspeed measurements; and altitude alerters.Further, the company offers the engine and fuel displays that convey information related to fuel and oil levels, and engine activity, including oil and hydraulic pressure and temperature; integrated global navigation systems; ThrustSense, a full regime autothrottle; and utility management systems.It serves commercial air transport carriers and corporate/general aviation companies, the Department of Defense and its commercial contractors, aircraft operators, aircraft modification centers, government agencies, and foreign militaries, as well as original equipment manufacturers.


Innovative Solutions and Support, Inc.was incorporated in 1988 and is based in Exton, Pennsylvania.

Show Full description

1.b. Last Insights on ISSC

Recent highlights for Innovative Solutions and Support, Inc. include: * 18.4% year-over-year revenue growth in Q4 2024, driven by net revenue of $15.4 million. * Selection of the company's patented ThrustSense Autothrottle system by the US Army for installation on their C-12 (B200) aircraft, providing full flight envelope protection and enhanced safety and efficiency. * Upcoming Q4 2024 earnings release and conference call on December 19, 2024, which will review the company's financial results and recent events. * Continued growth in the commercial, business aviation, and military markets, driven by the company's advanced avionic solutions.

1.c. Company Highlights

2. Innovative Aerosystems Posts Strong Q4 and Full-Year Fiscal 2025 Results

Innovative Aerosystems reported a robust fourth quarter and full-year fiscal 2025 performance, driven by significant growth in the air transport market and business aviation. Revenue for Q4 increased 45% year-over-year to $22.2 million, resulting in net income of $7.1 million or $0.39 per diluted share. Adjusted EBITDA was $9.6 million, up 71% from the prior year. For the full year, revenue was $84 million, up nearly 80% from the previous year, with net income of $15.6 million or $0.88 per diluted share and adjusted EBITDA of $25 million, up over 80%. The actual EPS for the quarter was $0.14, slightly below estimates of $0.16.

Publication Date: Dec -23

📋 Highlights
  • Revenue Surge: Q4 revenue hit $22.2 million (+45% YoY), full-year revenue reached $84 million (+80% YoY).
  • Profitability Growth: Net income rose to $7.1 million in Q4 (+71% YoY), with adjusted EBITDA at $9.6 million (+71% YoY); full-year net income $15.6 million, EBITDA $25 million (+80% YoY).
  • Strong Financial Flexibility: Closed $100 million credit facility and ended with 0.9x leverage ratio, supporting acquisitions and growth.
  • 2026 Guidance: Targets $250 million revenue and 25-30% EBITDA margins, factoring in modest organic growth after 2025’s $22.2 million Q4 pull-forward effects.
  • Backlog and Order Momentum: Year-end backlog of $77 million and Q4 book-to-bill over 1, driven by sales team expansion and military/aviation demand.

Operational Highlights

The company made significant progress on new product development, including the Liberty Flight Deck and UMS2 platform, and completed the integration of the F-16 program production into its Exton facility. The Liberty Flight Deck has been well-received by customers, offering customization without significant NRE requirements. The company's strong backlog of $77 million and new $100 million committed credit agreement provide flexibility for organic growth and strategic acquisitions.

Outlook and Guidance

Innovative Aerosystems expects to deliver another year of profitable growth in fiscal 2026, targeting adjusted EBITDA margins of 25-30% and $250 million in revenue. However, organic revenue growth is expected to be more modest due to the pull-forward of revenue related to the F-16 production and service revenue. The company estimates high single-digit year-over-year organic revenue growth on a normalized basis. Analysts estimate next year's revenue growth at 6.7%.

Valuation and Financial Flexibility

The company's leverage at the end of the quarter was 0.9x, providing significant financial flexibility to execute strategic initiatives. With a Return on Equity (ROE) of 30.54% and Return on Invested Capital (ROIC) of 19.53%, Innovative Aerosystems demonstrates strong profitability. The stock trades at a P/E Ratio of 20.56 and EV/EBITDA of 15.02, indicating a reasonable valuation. The Net Debt / EBITDA ratio is 0.99, suggesting a manageable debt burden.

3. NewsRoom

Card image cap

Recent Price Trend in Innovative Solutions and Support (ISSC) is Your Friend, Here's Why

Feb -03

Source: zacks.com

Card image cap

Innovative Aerosystems Announces First Quarter 2026 Results Conference Call and Webcast Date

Jan -29

Source: businesswire.com

Card image cap

Up 100%+ in 2025: Buy These 3 Profitable Stocks for Big 2026 Gains

Jan -20

Source: zacks.com

Card image cap

Best Defense Stocks to Buy for Geopolitical Uncertainty

Jan -19

Source: zacks.com

Card image cap

Innovative Solutions and Support (ISSC) Surges 15.8%: Is This an Indication of Further Gains?

Jan -15

Source: zacks.com

Card image cap

Innovative Solutions and Support (ISSC) Is a Great Choice for 'Trend' Investors, Here's Why

Jan -14

Source: zacks.com

Card image cap

5 Stocks With Recent Price Strength to Maximize Your Gains

Jan -14

Source: zacks.com

Card image cap

28,132 Shares in Innovative Solutions and Support, Inc. $ISSC Acquired by D.A. Davidson & CO.

Jan -14

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Flat Panel Display Systems

Expected Growth: 8.5%

The 8.5% growth of Flat Panel Display Systems from Innovative Solutions and Support, Inc. is driven by increasing demand for advanced avionics and cockpit displays in the aerospace industry, coupled with the need for modernization and upgrade of existing fleets. Additionally, growing adoption of digital displays in military and commercial aircraft, as well as rising investments in research and development, contribute to this growth.

Air Data Systems and Components

Expected Growth: 6.17%

The 6.17% growth in Air Data Systems and Components from Innovative Solutions and Support, Inc. is driven by increasing demand for advanced avionics, rising adoption of unmanned aerial vehicles (UAVs), and growing need for real-time data analytics in the aerospace industry.

7. Detailed Products

Flight VUE

A comprehensive flight test instrumentation system that provides real-time data acquisition, recording, and display capabilities.

Test VUE

A modular, scalable, and customizable test and measurement system for a wide range of applications.

DIADEMS

A data acquisition and analysis software that provides advanced data processing, visualization, and reporting capabilities.

TSIM

A simulation and modeling software that provides a realistic and dynamic simulation environment for testing and training.

Engineering Services

A range of engineering services including system design, development, integration, and testing.

8. Innovative Solutions and Support, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is moderate due to the availability of alternative solutions in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of a large number of customers with significant purchasing power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry and the need for significant investment in technology and infrastructure.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of a large number of competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.54%
Debt Cost 3.95%
Equity Weight 66.46%
Equity Cost 9.19%
WACC 7.43%
Leverage 50.47%

11. Quality Control: Innovative Solutions and Support, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sturm Ruger

A-Score: 4.2/10

Value: 4.2

Growth: 2.8

Quality: 5.0

Yield: 6.0

Momentum: 1.5

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
AMMO

A-Score: 4.2/10

Value: 7.8

Growth: 2.3

Quality: 3.2

Yield: 0.0

Momentum: 9.0

Volatility: 2.7

1-Year Total Return ->

View Full Report
Stock-Card
Innovative Solutions and Support

A-Score: 4.1/10

Value: 2.7

Growth: 6.3

Quality: 7.2

Yield: 0.0

Momentum: 7.0

Volatility: 1.3

1-Year Total Return ->

View Full Report
Stock-Card
Smith & Wesson Brands

A-Score: 4.1/10

Value: 5.4

Growth: 1.9

Quality: 4.3

Yield: 7.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

View Full Report
Stock-Card
VSE

A-Score: 3.9/10

Value: 1.3

Growth: 2.9

Quality: 5.2

Yield: 0.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Redwire

A-Score: 3.1/10

Value: 8.2

Growth: 4.0

Quality: 4.0

Yield: 0.0

Momentum: 1.5

Volatility: 0.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

19.89$

Current Price

19.89$

Potential

-0.00%

Expected Cash-Flows