Innovative Aerosystems (ISSC) investor relations material

Executive summary

• Achieved 36.5% year-over-year revenue growth to $21.8 million, driven by strong commercial aftermarket demand and increased service activity.

• Adjusted EBITDA rose 140.9% to $7.4 million, reflecting improved revenue mix and operating leverage.

• Net income reached $4.1 million ($0.22 per diluted share), with adjusted net income at $4.5 million ($0.25 per diluted share).

• Advanced the IA Next strategy and completed integration of F-16 component production into the expanded Exton facility, supporting future revenue and margin improvements.

• Backlog at quarter-end was $75 million, with new orders of $19 million and an active acquisition pipeline aligned with strategic objectives.

Financial highlights

• Gross profit increased 80% to $11.9 million, with gross margin rising to 54.5% from 41.4% year-over-year.

• Operating expenses were $5.6 million, up from $5.3 million, but declined as a percentage of revenue to 25.6% from 33%.

• Operating income was $6.3 million, up from $1.3 million in the prior year period.

• Free cash flow surged to $7 million, up 346% year-over-year, despite higher capital expenditures.

• Product sales reached $13.6 million (up from $10 million), and service revenue was $8.2 million (up from $6 million) year-over-year.

Outlook and guidance

• Organic revenue for fiscal 2026 expected to be essentially flat year-over-year due to prior pull-forward of F-16 revenue.

• Q2 revenues projected between $20 million and $22 million, with sequential growth expected through the year.

• Long-term targets include $250 million in revenue and Adjusted EBITDA margins of 25%-30%, with a focus on both organic growth and accretive acquisitions.

• Management reaffirmed confidence in the business growth trajectory, citing commercial aviation strength, anticipated defense revenue ramp, and growing backlog.