EXTON, PA — Innovative Solutions & Support, Inc. (Nasdaq: ISSC) posted strong fiscal third quarter 2025 results, driven by contributions from its newly acquired F-16 product line and progress on its manufacturing expansion. The company also secured a new $100 million credit facility to support future growth initiatives.
Revenue for the quarter ended June 30 rose 105% year-over-year to $24.1 million. Net income increased to $2.4 million, or $0.14 per diluted share, compared with $1.6 million, or $0.09 per share, a year earlier. Adjusted EBITDA climbed 43% to $4.4 million.
Gross profit reached $8.6 million, up from $6.3 million in the same period last year, though gross margin narrowed to 35.6%. The company cited elevated costs on the F-16 line as Honeywell accelerated production and built safety stock before fully transitioning manufacturing to IS&S’s Exton facility. Executives expect margins to improve once the transition is complete in fiscal 2026.
Operating expenses rose to $5.1 million from $4.2 million, reflecting added costs from the Honeywell acquisition, including higher staffing, amortization, and one-time expenses. Still, expenses fell to 21% of revenue, down sharply from 36% a year earlier, underscoring improved operating leverage.
Backlog at quarter’s end stood at $72.4 million, excluding additional long-term program orders with major OEMs such as Pilatus, Textron, Boeing, and Lockheed Martin. New orders in the period totaled $16.9 million.
On the balance sheet, IS&S reported $23.3 million in long-term debt and $0.6 million in cash, resulting in $22.7 million in net debt. Net debt fell $3.5 million during the quarter despite heavy capital spending on the Exton facility expansion. Available liquidity stood at $12.3 million as of June 30.
In July, the company closed a new five-year, $100 million syndicated credit agreement led by JPMorgan Chase Bank, replacing its prior $35 million facility. The agreement includes a $30 million revolving loan, a $25 million term loan, a $45 million delayed draw term loan, and an option to request up to $25 million more under an accordion feature. Management said the expanded facility enhances flexibility for both organic investments and acquisitions.
IS&S completed construction of its Exton manufacturing facility in the quarter, with fit-out expected to finish in early fall. The site will support full integration of the F-16 line and provide additional capacity to scale production.
Chief Executive Officer Shahram Askarpour said the company remains on track to deliver more than 30% revenue and EBITDA growth for the full year. “We continue to be excited by the opportunities across our commercial, business, and military markets and remain committed to a disciplined capital allocation strategy,” he said.
For the first nine months of fiscal 2025, IS&S generated $10.3 million in operating cash flow, compared with $5.4 million in the prior-year period. Capital expenditures rose to $5.5 million from $0.5 million, reflecting investment in the Exton facility, while free cash flow held steady at $4.8 million.
The results highlight a period of rapid growth for IS&S, supported by new defense production, facility expansion, and a strengthened financial position to pursue its long-term growth strategy.
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