EXTON, PA — Innovative Solutions & Support Inc. (Nasdaq: ISSC), doing business as Innovative Aerosystems, reported fiscal first-quarter 2026 net sales of $21.8 million and net income of $4.1 million for the three months ended December 31, 2025, the company announced.
Revenue increased 36.5% from the prior-year period, driven by growth in commercial aftermarket products and higher services revenue. Net income rose from $0.7 million, or $0.04 per diluted share, in the year-ago quarter to $4.1 million, or $0.22 per diluted share.
Adjusted net income was $4.5 million, or $0.25 per diluted share, compared with $1.6 million, or $0.09 per diluted share, in the same quarter last year.
Gross profit totaled $11.9 million, up 79.8% year over year, while gross margin expanded to 54.5% from 41.4%. Operating expenses were $5.6 million, compared with $5.3 million a year earlier, as selling, general and administrative expenses declined to 19.5% of revenue from 26.0%.
EBITDA increased to $7.4 million from $2.7 million in the prior-year quarter. Adjusted EBITDA was $7.4 million, up from $3.1 million, reflecting a more favorable revenue mix and improved expense management.
“We delivered a strong start to the year, driven by significant organic growth in revenue, Adjusted EBITDA, and margins, supported by continued momentum within the commercial aviation market,” said Chief Executive Officer Shahram Askarpour. He said first-quarter revenue grew 37% on “increased commercial aftermarket demand and service activity,” while Adjusted EBITDA rose 141%.
The company completed integration of F-16 component-related production into its expanded Exton facility during the quarter. Revenue related to the F-16 platform was lower due to the manufacturing transition and shipment timing.
Askarpour said the company expects F-16 revenue to scale during the fiscal year and anticipates “improved manufacturing efficiencies” that should support margins in fiscal 2026.
Operating cash flow increased to $8.2 million from $1.8 million a year earlier. Capital expenditures totaled $1.1 million, resulting in free cash flow of $7.0 million, compared with $1.6 million in the prior-year period.
“As we look ahead to the remainder of fiscal 2026, we remain confident in the growth trajectory of our business,” Askarpour said, citing strength in commercial aviation, an anticipated ramp in defense-related revenue and a growing backlog.
New orders in the quarter totaled approximately $19 million, and backlog stood at about $75 million as of December 31, 2025.
Total debt was $23.8 million at quarter end, with cash and cash equivalents of $8.3 million, resulting in net debt of $15.5 million. The company reported available liquidity of $83.3 million, including $75.0 million under its credit facility.
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