Innovative Solutions & Support Inc. (NASDAQ:ISSC) Q3 2019 Earnings Conference Call Transcript

Aug 08, 2019 • 10:00 am ET

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Innovative Solutions & Support Inc. (NASDAQ:ISSC) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to Innovative Solutions and Support's Third Quarter 2019 Earnings Conference Call. All participants today will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. At this time, I would like to turn the conference over to Geoffrey Hedrick, Chairman and CEO. Please proceed.

Executive
Geoffrey S. M. Hedrick

Good morning. This is Geoff Hedrick. I'd like to welcome you this morning to our conference call to discuss our performance for the third quarter of fiscal 2019, current business conditions and our outlook for the coming year. Joining me today are Shahram Askarpour, our President; and Relland Winand, our CFO.

Before I begin, I'd like Rell to read the safe harbor message. Rell?

Executive
Relland Winand

Thank you, Geoff, 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 also on file with the SEC, and other public filings.

Now I'll turn the call back to Geoff.

Executive
Geoffrey S. M. Hedrick

Thank you, Rell. The company's third quarter results continue to reflect the cost controls and marketing refocus initiated at the end of the last fiscal year. The revenue increase this quarter and profit -- and we were profitable for the third consecutive quarter. Profits were also up sequentially, and we generated 28% of our revenue in cash, $1.3 million.

Once again, each of the three markets segments we serve, Commercial Air Transport, General Aviation, and Military, contributed to our third quarter results. In addition, customer service revenue remains strong. The company's ability to have products that provide access to these markets remains the core strength of the company.

Substantial revenues in the third quarter were generated from our General Aviation PC-24 production and the retrofit programs for Commercial Air Transport. In the Military market, we continue production for the KC-46 program, and the Navy continues to evaluate our new air data computer for the company and we have developed for the F5. We believe that these programs, along with our steady maintenance activities, will provide a solid base of revenues over the coming quarters. Excuse me.

In addition, the revenue and development expenses have been relatively constant at approximately 15% of revenues, a historical sweet spot. The company continues to implement its strategy of investing in fewer, but more promising technologies and products. At the same time, we continued our optimistic outlook for our patented ThrustSense autothrottle, especially now that we've added a twin Turboprop STC to our portfolio.

Just recently, our new ThrustSense autothrottle on the Beechcraft King Air twin engine turboprop was subject to a, was the subject of an Aviation International News feature. They found our autothrottle safety benefits compelling and noted how