Innovative Aerosystems (ISSC) Q3 2026 earnings summary

Executive summary

• Achieved strong operational and financial performance in Q3 2026, with revenue up 10.7% to $26.7 million, driven by organic growth in commercial and business aviation and contributions from acquisitions.

• Net income for the quarter was $4.5 million ($0.25 per diluted share), up from $2.4 million ($0.14 per share) last year.

• Completed the acquisition of Aydin Displays, expanding capabilities in military, naval, ground, and medical markets.

• Rebranded to Innovative Aerosystems with a Nasdaq ticker change to IA, and added to the Russell 2000 Index.

• For the nine months ended June 30, 2026, net sales grew 12.5% to $70.9 million, and net income increased to $12.0 million from $8.5 million.

Financial highlights

• Gross margin reached 51.7% for Q3 2026, up from 35.6% a year ago, and 52.4% for the nine months.

• Adjusted EBITDA rose 75% year-over-year to $7.7 million, with EBITDA margin at 27% and adjusted EBITDA margin at 29%.

• Operating income for the quarter was $6.0 million, up from $3.5 million year-over-year.

• Free cash flow for the first nine months was $12.3 million, up from $4.8 million in the prior year; operating cash flow was $15.5 million (+50.4%).

• R&D and SG&A expenses increased significantly due to investment in next-gen capabilities and acquisition-related costs.

Outlook and guidance

• Q4 2026 revenue expected to be $28–$30 million, with continued organic growth and contributions from acquisitions.

• Confident in achieving the long-term $250 million revenue target.

• Gross margin guidance remains at 45–50%, with expectations to maintain around 50% as product mix stabilizes.

• Backlog at June 30, 2026, was $82.9 million, up from $77.4 million at September 30, 2025; 78% expected to convert to revenue in the next 12 months.

• Liquidity is expected to be sufficient for at least the next 12 months, supported by cash, operations, and credit facilities.