EXTON, PA — Innovative Aerosystems (Nasdaq: IA) nearly doubled its third-quarter profit to $4.5 million as stronger commercial aviation demand lifted margins and recent acquisitions expanded the avionics manufacturer into additional defense markets.
Net income increased from $2.4 million a year earlier, while diluted earnings rose to 25 cents per share from 14 cents.
Revenue climbed 10.7% to $26.7 million for the quarter ended June 30, driven by growth in commercial aerospace and business aviation and contributions from acquisitions.
Gross profit increased 60.9% to $13.8 million, while gross margin expanded to 51.7% from 35.6%.
The improvement reflected a more favorable commercial aftermarket sales mix and the timing of expenses associated with moving F-16 manufacturing into the company’s Exton facility during the previous year.
Adjusted net income increased to $6 million, or 33 cents per diluted share, from $2.9 million, or 16 cents per share.
Adjusted earnings before interest, taxes, depreciation and amortization rose approximately 75% to $7.7 million from $4.4 million. Unadjusted EBITDA increased to $7.3 million from $4.3 million.
Operating expenses climbed to $7.8 million from $5.1 million as the company increased spending on research, business development and acquisitions.
Chief Executive Officer Shahram Askarpour identified acquisitions and new aircraft programs as central to the company’s long-term goal of reaching $250 million in annual revenue.
In July, Innovative Aerosystems completed its acquisition of Aydin Displays, adding display technologies and expanding its defense business into naval and ground applications.
The company also secured an agreement with a Japanese electric vertical takeoff and landing aircraft developer to design the aircraft’s primary display and avionics architecture.
The contract represents the first production award for Innovative Aerosystems’ Liberty Flight Deck platform.
“Our acquisition of Aydin Displays adds highly complementary display technologies to our portfolio, strengthens our position in the military market, and expands our capabilities into the naval and ground defense sectors,” Askarpour stated.
New orders totaled $22.7 million during the quarter, leaving the company with an $82.9 million backlog as of June 30.
That backlog includes committed purchases but excludes potential future production orders associated with products developed under engineering contracts.
Operating cash flow increased 50.4% to $15.5 million during the first nine months of fiscal 2026, compared with $10.3 million a year earlier.
Free cash flow climbed approximately 155% to $12.3 million from $4.8 million, while capital expenditures declined to $3.2 million from $5.5 million.
The company ended June with $54.5 million in debt and $10.7 million in cash, resulting in net debt of $43.8 million.
Net debt increased by $21 million from a year earlier after the company deployed more than $35 million toward acquisitions and the expansion of its Exton facility.
Total available liquidity stood at $53.7 million, including $43 million in unused credit capacity. Net debt represented 1.4 times trailing 12-month adjusted EBITDA.
Innovative Aerosystems was also added to the Russell 2000 Index and changed its stock ticker to IA as part of its corporate rebranding.
Management expects continued demand across commercial aviation, business jets and military markets to support results through the remainder of fiscal 2026.
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